Are we in an economic recession?
According to figures released by the Dept. of Labor Friday morning, December civilian unemployment jumped three-tenths of a percent from 4.7% to 5%, representing a .6% increase over the March 2007 rate of 4.4%.
According to historical statistics that I analyzed today, since 1948 there were 160 prior months when there was a .6% or greater increase in the unemployment rate over the trough (minimum) unemployment rate of the prior 9 months. Every single one of these 160 indicator months fell before, during, or after one of the 10 recessions since 1948.
Looking at the 10 recessions since 1948, this .6% indicator coincided with the start of the recession in one case (1980), with the 3d month in two cases (1970 & 1990), and with the 4th month of the recession in four cases (1953, 1981, 1974, & 2001). In three of the ten cases, the indicator preceded the recession: in 1957 the indicator month preceded the recession by 2 months, in 1959 the indicator month preceded the recession by 6 months, and in 1948 (the first year of the Labor data) the indicator month preceded the recession by 8 months.
In other words, since the 1960-61 recession began in April 1960, every one of the 115 months with an unemployment rate .6% higher than one of the prior 9 months was either during a recession or in the aftermath of a recession.
Further, in every recession cycle, in the first month that included both a .3% jump from the immediately prior month and a .6% increase over the trough of the prior 9 months, we were already in a recession by the time the data was reported (in the following month).
If the past is any guide to the future–and anyone doing backtesting knows that it often isn