The National Bureau of Economic Research, the nonpartisan group charged with making the call, announced Monday that U.S. economy entered a recession in December 2007. AIER’s statistical indicators, in contrast, warned about a recession months before its official start date and more than a year and a half before NBER’s official announcement.

We first wrote that the recession was likely, based on the analysis of our statistical indicators of business-cycle conditions, in April 2007. By July 2008, we wrote that the recession had probably begun. Last December, the official peak of economic activity that marked the start of the recession, AIER had already begun to warn that the recession was likely, despite the seemingly upbeat economic data available at the time.

AIER’s methodology aims at forecasting the reversals in business-cycle trends just before or shortly after they happen, when there is still time to alter plans in preparation for an economic downturn. Given the complexity of measuring economic activity accurately, it is rare to forecast the business-cycle reversals exactly. A discrepancy of a few months is inevitable, but AIER forecasts usually lead the official start date of a recession by several months. 

The current recession, which is the 11th since World War II, ended an expansion that lasted 73 months. The table below shows when AIER first said a turn in the business cycle was likely compared to the official dates for business-cycle peaks and troughs. 

To receive AIER’s detailed monthly analysis of business-cycle conditions, plus articles and books on a wide range of economic issues, become a member.

Share this article: