Ed Leamer of UCLA has a very interesting discussion that relates directly to my recent post asserting that we probably weren't in a recession. Here's the abstract of his paper:
Monthly US data on payroll employment, civilian employment, industrial production and the unemployment rate are used to define a simple recession dating algorithm that nearly perfectly reproduces the NBER official peak and trough dates. The only substantial point of disagreement is with respect to the NBER November 1973 peak. The algorithm prefers September 1974. In addition, this algorithm indicates that the data through June 2008 do not yet exceed the recession thresholds, and will do so only if things get much worse.
Paper available here; hat tip to the Freakonomics blog. I like Leamer's approach, but he too readily dismisses the data series preferred by NBER. They are not that hard to track down, if you have a bit of experience working with economic data.
Does this matter? Not really. If your business is very sensitive to the business cycle (like durable goods manufacturing), it's feeling like a recession. If your business is not very sensitive to the cycle (like health services), then it does not feel like a recession.