Sunday, February 06, 2011

Recession Measures

by Bill McBride on 2/06/2011 02:28:00 PM

According to the Bureau of Economic Analysis (BEA), real GDP is now slightly above the pre-recession peak. Real GDP (in 2005 dollars) was at $13,382.6 billion in Q4, just 0.14% above the $13,363.5 billion in Q4 2007.

Note: The following graphs are all constructed as a percent of the peak in each indicator. This shows when the indicator has bottomed - and when the indicator has returned to the level of the previous peak. If the indicator is at a new peak, the value is 100%.

GDP Percent Previous Peak Click on graph for larger image in graph gallery.

This graph is for real GDP through Q4 2010. This shows real GDP is back to the pre-recession peak. However there are really two measures of GDP: 1) real GDP, and 2) real Gross Domestic Income (GDI). The BEA will release GDI with the 2nd GDP estimate, and I expect GDI will not be above the pre-recession peak until this quarter (Q1 2011).

And real GDP has performed better than other indicators ...

Personal Income less Transfer This graph shows real personal income less transfer payments as a percent of the previous peak.

This has been slow to recover - and is still 4.3% below the previous peak.

Much of the growth in PCE over the last year has come from transfer payments - this includes people taking Social Security early, extended unemployment benefits, and other assistance programs - and it will be some time before this indicator returns to pre-recession levels.

And two more graphs to show two key monthly indicators:

Industrial Production This graph is for industrial production through December.

Industrial production has been one of the stronger performing sectors because of inventory restocking and some growth in exports.

However industrial production is still 5.8% below the pre-recession peak, and it will probably be some time before industrial production returns to pre-recession levels.

Employment The final graph is for employment. This is similar to the graph I post every month comparing percent payroll jobs lost in several recessions.

Payroll employment is still 5.6% below the pre-recession peak. And even with slightly above trend GDP growth in 2011, payroll employment growth will probably only recover slowly.

Payroll employment is still 7.7 million below the pre-recession peak, and if the the U.S. adds 2.5 million payroll jobs per year over the next 3 years (my current forecast is 2.4 million private sector jobs this year), it would take 3+ years to return to the pre-recession peak. And that doesn't include population growth!

Summary for Week ending February 5th
Schedule for Week of Feb 6th

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