The Mildest Recession: Output, Profits, and Stock Prices as the U.S. Emerges from the 2001 Recession

32 Pages Posted: 4 Jun 2002

See all articles by William D. Nordhaus

William D. Nordhaus

Yale University - Department of Economics; Cowles Foundation, Yale University; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: May 2002

Abstract

This essay examines the state of the United States economy as it emerges from the 2001 recession. A comparison of several central economic variables indicates that the 2001 recession was the mildest recession in the postwar period. In light of highly differentiated characteristics of recessions, the paper suggests that we differentiate among downturns by a five-category "recession severity scale," analogous to the Saffir-Simpson Hurricane Scale. According to this approach, the 2001 recession fits in the least severe box, a "category I recession," along with the 1963 and 1967 non-recessions. The paper next examines the behavior of profits in recent years and shows that financial finagling has infected the aggregate profits numbers. Finally, the study constructs a measure of the forward-looking return on equities and concludes that the prospective real yield on equities in early 2002 is at its low point of the last half-century.

Keywords: Recession, Profits, Stock Prices, Returns

JEL Classification: E3, E4

Suggested Citation

Nordhaus, William D., The Mildest Recession: Output, Profits, and Stock Prices as the U.S. Emerges from the 2001 Recession (May 2002). Available at SSRN: https://ssrn.com/abstract=313003

William D. Nordhaus (Contact Author)

Yale University - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States
203-432-3598 (Phone)
203-432-5779 (Fax)

Cowles Foundation, Yale University ( email )

Box 208281
New Haven, CT 06520-8281
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
242
Abstract Views
2,310
rank
97,690
PlumX Metrics