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The Economy in Perspective

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Normalization, of a sort…The current expansion, which began in November 2001, followed a mild eight-month contraction (since 1945, the average length of contractions has been 10 months). In one sense, all contractions are alike because the National Bureau of Economic Research (NBER) determines the dates of business cycle peaks and troughs by applying a standard set of measurement criteria. In a nutshell, the NBER defines a contraction as a period of significant decline in economic activity, lasting more than a few months, and in which the decline is spread across the economy and evident in spending, income, sales, production, and employment. An expansion begins when these patterns no longer are evident, although the NBER notes that when an upturn begins, economic activity is “…typically below normal and sometimes remains so well into the expansion.”

Suggested citation: "The Economy in Perspective," Federal Reserve Bank of Cleveland, Economic Trends, no. 04-10, pp. 01, 10.01.2004.

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