# Trailing indicators: more recession analysis

jbone at place.org jbone at place.org
Thu Sep 25 12:58:23 PDT 2003

```Greg says:

> Third, many economic indicators are trailing

Russell says:

> I suspect the greatest question in the
> analysis will be issue of time lag and
> causality.

Under various assumptions of how far recession trails possible causal
events, you can place partisan blame as follows.  Top row is assumption
of how far recession trails causal events.

Start			0	1	2	3	4	5
4th Q 1969	G	G	G   	G	D	D
4th Q 1973	G	G	G	G	G	G
1st Q 1980	D	D	D	D	D	D
3rd Q 1981	G	G	G	D	D	D
3rd Q 1990	G	G	G	G	G	G
1st Q 2001	G	D	D	D	D	D

So under the worst possible set of assumptions you can blame the Dems
for the onset of 2/3 of the recessions in the period.  I submit,
however, that assuming that recessions trail effects by a year or more
is rather absurd.  Given a more realistic assumption (onset trails
effect by 3 complete quarters) it's the other way around:  GOP gets 2/3
of the blame for onset.  Under the marginal 4Q assumption, they split
the bill 1/2 GOP, 1/2 Dem.

Let's look at blame by quarter in recession under each of the various
trailing assumptions.  Bear with, this is a lot of data:

Onset of or continuation of recession trails causal events by:

0Q

Start			Quarters into recession

0	1	2	3	4	5
4Q69		G	G	G   	G	-	-
4Q73		G	G	G	G	G	-
1Q80		D	D	-	-	-	-
3Q81		G	G	G	G	G	-
3Q90		G	G	-	-	-	-
1Q01		G	G	G	G	G	G

G/D:  22/24

--

1Q

Start			Quarters into recession

0	1	2	3	4	5
4Q69		G	G	G   	G	-	-
4Q73		G	G	G	G	G	-
1Q80		D	D	-	-	-	-
3Q81		G	G	G	G	G	-
3Q90		G	G	-	-	-	-
1Q01		D	G	G	G	G	G

G/D:  22/24

--

2Q

Start			Quarters into recession

0	1	2	3	4	5
4Q69		G	G	G   	G	-	-
4Q73		G	G	G	G	G	-
1Q80		D	D	-	-	-	-
3Q81		G	G	G	G	G	-
3Q90		G	G	-	-	-	-
1Q01		D	D	G	G	G	G

G/D:  21/24

--

3Q

Start			Quarters into recession

0	1	2	3	4	5
4Q69		G	G	G   	G	-	-
4Q73		G	G	G	G	G	-
1Q80		D	D	-	-	-	-
3Q81		D	G	G	G	G	-
3Q90		G	G	-	-	-	-
1Q01		D	D	D	G	G	G

G/D:  19/24

--

4Q  (nb:  even though this assumption is rather absurd...)

Start			Quarters into recession

0	1	2	3	4	5
4Q69		G	G	G   	G	-	-
4Q73		G	G	G	G	G	-
1Q80		D	D	-	-	-	-
3Q81		D	D	G	G	G	-
3Q90		G	G	-	-	-	-
1Q01		D	D	D	D	G	G

G/D:  17/24

--

So even under absurdly pessimistic / partisan assumptions about the
length of time between causal events and effect (onset, continuation,
or conclusion) it is clear that the VAST MAJORITY --- ~70% --- of all
recessionary quarters have causal roots in quarters under GOP