Economics of Macro Issues 7th Edition by Roger LeRoy Miller,Daniel Benjamin

Exercise 5

The stock market has been called a "leading indicator" of future economic activity, while the unemployment rate has been called a "lagging indicator" of past economic activity. Combine the data from questions 1 and 2, including data on the stock market and the unemployment rate to answer the following two questions:
a. How well do movements in a stock price index (such as the DJIA or the S P 500) predict ahead of time the beginning or end of each recession?
b. How well do beginnings or endings of recessions predict future changes, up or down, in the unemployment rate?
Question 1
Examine the data from the last six recessions. (Good sources for data are www.nber.org/cycles/recessions.html, www.bea.gov, and www.globalindicators.org.) Rank them on the basis of both duration and severity. The first is easy; the second is more difficult: Is it possible that some people-either politicians or other citizens-might disagree about how to measure the severity of a particular recession? How would you measure it?
Question 2
Return to the data you examined for question. Some people have called the recession of 2007-2009 the "Great Recession." Based on the data you think most relevant, is this latest recession worthy of being singled out as "Great"? Explain.