Dating in business
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.
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.
A: It's more accurate to say that a recession–the way we use the word–is a period of diminishing activity rather than diminished activity.
We identify a month when the economy reached a peak of activity and a later month when the economy reached a trough.
In this respect, the unemployment rate is a lagging indicator.
The peak date at the end of 2007 coincided with the peak in employment.
We designated June 2009 as the trough, six months before the trough in employment, which is consistent with earlier trough dates in the NBER business-cycle chronology.
A: A bulge in jobless claims usually forecasts declining employment and rising unemployment, but we do not use the initial claims numbers in determining our chronology, partly because of noise in that data series.
Q: How do the cyclical fluctuations in the unemployment rate relate to the NBER business-cycle chronology?
In that cycle, as well, the dating of the trough relied primarily on output measures.