The shape of recession data
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How do you decide how bad a recession really is, and whether it is worse, or less painful, than the last one? In the BBC Magazine Michael Blastland has taken six indicators, and mapped them all on a web to show the relative shape of the last three recessions. In the article about the technique he describes the difficulties of choosing the most appropriate data points in order to get a useful comparison. The indicators he has used are related to figures giving the most extreme points reached in each of the last three recessions:
top to bottom percentage fall in GDP;
peak repossessions as a proportion of mortgaged properties;
peak quarterly unemployment rate;
peak annual business liquidations as a proportion of companies on the active register;
peak annual public sector borrowing as a proportion of GDP;
worst annual change in real disposable income per head.
However, he makes the point that any number of different indicators could be used, depending on the particular area of interest that you wanted to compare. It would be possible to ask students to choose the indicators that they found the most relevant and draw their own recession webs, using data from any number of sources, and to justify their choice before they analyse the results of their work.
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