Federal Reserve Declares Recession Over

February 17, 2010 11:55am by Barry Ritholtz

Last month, we noted that the St. Louis Fed had declared in their charts that the recession was over (Dude, Where’s My Recession Bar?).

Now, it appears that with the latest G17 release on Industrial Production, the Federal Reserve is making the same assumption. They make note of this referring to several charts (below) stating:

“The shaded areas are periods of business recession as defined by the National Bureau of Economic Research (NBER). The last shaded area begins with the peak as defined by the NBER and ends at the trough of a 3 month moving average of manufacturing IP.”

They are referring to the technical definition of contractions (recessions) as starting “at the peak of a business cycle and end at the trough (as defined by the NBER).

Ron Griess observed the 3 month MA of the MANUFACTURING index:

12/31/08	101.5532	104.4655
1/31/09	98.781	101.6714
2/28/09	98.7251	99.6864
3/31/09	97.2599	98.2553
4/30/09	96.9201	97.6350
5/31/09	96.026	96.7353
6/30/09	95.6559	96.2007
7/31/09	97.2692	96.3170
8/31/09	98.4819	97.1357
9/30/09	99.108	98.2864
10/31/09	99.0424	98.8774
11/30/09	99.9374	99.3626
12/31/09	99.8848	99.6215
1/31/10	100.9264	100.2495

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Hence, as the following charts reveal, the Fed is marking the Recession over as of Q2’s end, based upon industrial production bottom.

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Industrial production, capacity, and utilization

Industrial production and capacity utilization

Hat tip Bob Dieli.

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