Dating 20 years ago
The trough dates for these indicators are: Macroeconomic Advisers' monthly GDP (June) The Stock-Watson index of monthly GDP (June) Their index of monthly GDI (July) An average of their two indexes of monthly GDP and GDI (June) Real manufacturing and trade sales (June) Index of Industrial Production (June) Real personal income less transfers (October) Aggregate hours of work in the total economy (October) Payroll survey employment (December) Household survey employment (December) The committee concluded that the choice of June 2009 as the trough month for economic activity was consistent with the later trough months in the labor-market indicators–aggregate hours and employment–for two reasons.
First, the strong growth of quarterly real GDP and real GDI in the fourth quarter was inconsistent with designating any month in the fourth quarter as the trough month.
It places particular emphasis on measures that refer to the total economy rather than to particular sectors.
These include a measure of monthly GDP that has been developed by the private forecasting firm Macroeconomic Advisers, measures of monthly GDP and GDI that have been developed by two members of the committee in independent research (James Stock and Mark Watson, (available here), real personal income excluding transfers, the payroll and household measures of total employment, and aggregate hours of work in the total economy.
The trough marks the end of the declining phase and the start of the rising phase of the business cycle.
Economic activity is typically below normal in the early stages of an expansion, and it sometimes remains so well into the expansion.
Apart from a random statistical discrepancy, real GDI satisfies that equality while real personal income does not.
The committee also maintains a quarterly chronology of business cycle peak and trough dates.
The committee's use of income-side measures, notably real GDI, is based on the accounting principle that the value of output equals the sum of the incomes that arise from producing the output.There were two reasons for selecting the earlier date.The first was described above -- the fact that quarterly real GDP and GDI rose strongly in the fourth quarter.Real GDP reached its low point in the second quarter of 2009, while the value of real GDI was essentially identical in the second and third quarters of 2009.