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HomeEconomyWhy we don't call it a recession based on oil use

Why we don’t call it a recession based on oil use


reader Steven Kopitz wrote:

I think the 2011 recession was a good bet. It was the only time in U.S. history that oil consumption fell—and it fell sharply—without a so-called recession, and the next three years weren’t great, so Summers gave his secular stagnation speech in November 2013. Of course, Europe fell like a ton of bricks. This time they will too.

Here’s U.S. oil use (U.S. production plus imports minus exports):

figure 1: Total US oil use (blue) and seasonally adjusted (red) in 000 barrels. Dotted line for 2011M02. Seasonally adjusted using Census X-13. resource: EIAand the authors’ calculations.

What are some of the key metrics followed by the NBER’s Business Cycle Dating Committee?

figure 2: Nonfarm employment (dark blue), industrial production (red), 2012 personal income excluding transfers (green), 2012 manufacturing and trade sales (black), 2012 consumption (light blue), and 2012 Monthly GDP (pink) for January of the year, all log normalized to 2020M02=0. NBER defines recession dates, peaks and valleys, shades of gray. Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisers) (published June 1, 2022), NBER, and author’s calculations.

What about the quarterly frequency of GDP and other broad indicators? Here are GDP and Gross Domestic Product (average of GDP and GDI).The latter is widely regarded as a better measure of output than GDP alone (see Furman (2016)).

image 3: GDP (black) and gross domestic product (turquoise), both in billions of dollars in 2012, SAAR. The dotted line for the first quarter of 2011. Source: BEA, and author’s calculations.



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