Friday, May 08, 2009

Recession to end just around ... now?

People are predicting the future about the current recession all over the place -- this indicates the worst is over, that shows everything will soon be the worst since the Great Depression. Following my rule of thumb about pundits punditing about the future, "nobody knows 'nuthin", which has always served exceptionally well, I generally disregard them all.

But when Robert Gordon -- who's been a member of the NBER recession dating committee for 31 years -- ventures an opinion on same, attention should be paid.

Recently I have discovered a surprisingly tight historical relationship in past US recessions between the cyclical peak in new claims for unemployment insurance (measured as a four-week moving average) and the subsequent NBER trough...

[...extensive discussion of data ...]

Bottomline The US turnaround will come in May or June 2009

My reasoning leads me to conclude that the ultimate NBER trough of the current business cycle is likely to occur in May or June 2009, substantially earlier than is currently predicted by many professional forecasters.

As they say, if you are interested in such, read the whole thing.
[h/t: Roland Patrick]