How does Economy Track compare current and past economies?
Economy Track uses the method most often employed by economists, which is comparing business cycles. A business cycle has two parts: recession and recovery. The cycle starts when the economy is at its strongest, or at the peak, and continues through the recession to the low point, or the trough, until the economy begins to recover, eventually expands, and reaches a new, higher peak. These business cycles are the source of comparisons of peak-to-peak unemployment or peak-to-trough changes in a given trend. As an example, below is the total number of jobs in the economy from 1981 until May 2009. As the chart shows, each peak is followed by job loss, and then, by a period of job growth. Eventually the growth surpasses the peak from the prior business cycle and reaches a new peak.
What is a recession?
In the United States, the private, nonprofit National Bureau of Economic Research (NBER) is the organization most widely recognized for declaring official start and end dates to recessions. Contrary to a widely held belief, the NBER does not define a recession in terms of two consecutive quarters of decline in real gross domestic product (GDP). Instead, recessions are defined more subjectively as a “significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale retail sales.”
It is important to keep in mind that unemployment and certain other measures of economic health, tend to worsen after a recession officially ends. After the end of the last recession in 2001, it took 46 months before the economy regained all the jobs lost.
What is a recovery?
An economic recovery refers to the period of expansion in a business cycle. It begins at the end of one recession and ends just before the start of another downturn.
What statistics does Economy Track highlight?
There are many different economic indicators that measure workers’ well being, but none of them alone offer a complete picture. The official unemployment rate, for instance, does not count discouraged workers who have stopped looking, those who have exhausted unemployment benefits, or those who are working part-time because they cannot find full-time work. In an effort to better capture the conditions workers face on the ground, Economy Track highlights multiple metrics, including unemployment, underemployment,
labor force participation and the ratio between job seekers and job openings.
These indicators do not always move cyclically with gross domestic product (GDP), which measures the country’s overall productivity
and can increase while wages are stagnating. For example, the business cycle of the 2000s was very weak in terms of employment.
The first two years of that recovery were marked by continued job loss, which is why it is has often been referred to as the “jobless recovery.” Though the economy was growing at a robust rate, the number of jobs was not. The percentage of Americans who were employed
actually declined by 1.5 percentage points between 2001 and 2007, underscoring how weak the job market was long before the most recent recession officially began.
Economy Track highlights these disparities to illustrate how different workers fare during different business cycles.
What is the source of EPI’s data?
Most of the analysis from Economy Track is derived from data provided by the Bureau of Labor Statistics (BLS), a branch of the U.S. Department of Labor that collects and disseminates data on employment trends. Each month, the BLS issues a detailed report covering the employment picture from the prior month. Other sources of important data include the Bureau of Economic Analysis, an agency within the Department of Commerce that measures GDP, and the Federal Reserve. Each chart on Economy Track has the source listed at the bottom. To obtain the data yourself, click on the “See the Data” link at the bottom of every chart.