Industrial production continues to fade in importance as a contributing factor of economic growth. So I am still short these recession contracts (while being quite bearish on the financial sector):Over a year ago, I argued that Brad Delong was correct in asserting we wouldn't know if we were in a recession until we were well into one. I also mentioned that I didn't think we were in a recession at the time, largely because industrial production was still rising, and had not seemingly peaked as of August 2006.
That characterization no longer holds true. Originally, I was reassured by the experience during the last recession. In the March 2001-November 2001 recession, production (using the most recent vintage of industrial production series -- see this post regarding revised and real time data) peaked some 9 months or so before the onset of the recession.
Unfortunately, this characterization does not hold for the July 1990-March 1991 recession.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEixC9kvzJwHFgnAZhBLzCjP7SMWs-bO50mv6qeIjHYVQvYkUAI4Jo0nDmphpkCc6gXwssiyKErE5MnelJ68wjlOGuRxQ18LQUDnIaXMJGO3DPoq_aHrvk0zVJAO1mKakbR4jzDB/s400/recession.071204.png)
UPDATE: Labor market continues to look strong, which reduces recession risk.
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