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First, we do not identify economic activity solely with real GDP and real GDI, but use a range of other indicators as well.Second, we place considerable emphasis on monthly indicators in arriving at a monthly chronology.The NBER business-cycle chronology considers economic activity, which grows along an upward trend.As a result, the unemployment rate often rises before the peak of economic activity, when activity is still rising but below its normal trend rate of increase.The monthly GDP numbers are noisy and are subject to considerable revision. A: In the past, the NBER has made some small changes to cycle dates, most recently in 1975.No changes have occurred since 1978 when the Business Cycle Dating Committee was formed.Q: Why doesn't the committee accept the two-quarter definition?
How does that relate to the NBER's recession dating procedure?
A: Personal income comes from Table 2.6 of the National Income and Product Accounts, less personal current transfer receipts from the same table, deflated by a monthly interpolation of the price index for gross domestic product, NIPA Table 1.1.9. The committee also considered new estimates of monthly real GDP and GDI constructed by two committee members, James Stock and Mark Watson (available here).
Many of the ingredients of the quarterly GDP figures are published at a monthly frequency by government agencies.
In that cycle, as well, the dating of the trough relied primarily on output measures.
Q: Isn't a recession a period of diminished economic activity?