Dating Australian Recessions

When was Australia in recession? The simple (some would say simplistic) answer is when it experienced two quarters of negative growth. The more nuanced answer includes a substantial decline in spending over a number of months with an associated rise in the unemployment rate (of at least 1.5 per percentage points).

Why do I want to know? Well, I wanted to add a background shading to graphs to indicate recessions (as well as slowdowns that are not of a sufficient magnitude to be called a recession). An example follows in respect of the unemployment rate.

I thought Google would answer the question. But it was not immediately obvious. So beginning with the notion of two quarters of negative growth in real GDP, I have had a tilt at marking out Australia’s recessions since 1960. I have also used the notion of two consecutive quarter decline in real GDP per capita to mark out periods of economic slowness (especially when associated with a bump in the unemployment rate).

Looking at the ABS data some issues became obvious. The original series shows huge seasonality. The December quarter is typically up between eight and twelve percentage points on the previous September quarter. The March quarter typically evidences an even larger absolute contraction than the growth experienced in the December quarter. For this reason, when looking for recessions, most focus on the seasonally adjusted series.

But even this can be tricky.  How should zero growth quarters be treated? How should a small growth quarter be treated when it occurs in the middle of a series of contracting quarters?

Being a little capricious with the data, as a first cut, I have decided on the following periods as marking out Australian recessions and slowdowns. 

Recessions:

Start	Finish
1 Apr 1961	30 Sep 1961
1 Oct 1971	31 Mar 1972
1 Jan 1974	30 Jun 1974
1 Jul 1975	31 Dec 1975
1 Jul 1977	31 Dec 1977
1 Oct 1981	30 Jun 1983
1 Oct 1990	30 Jun 1991

Economic slowdowns:

Start	Finish
1 Oct 1960	30 Sep 1961
1 Oct 1971	31 Mar 1972
1 Jan 1974	30 Jun 1974
1 Jul 1975	31 Dec 1975
1 Jul 1977	31 Dec 1977
1 Oct 1981	30 Jun 1983
1 Jan 1986	30 Jun 1986
1 Oct 1989	31 Dec 1991
1 Jul 2000	31 Dec 2000
1 Jan 2006	30 Jun 2006
1 Apr 2008	30 Jun 2009

Comments welcome!