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Business Cycle Phases in U.S. States

The U.S. aggregate business cycle is often characterized as a series of distinct recession and expansion phases. We apply a regime-switching model to state-level coincident indexes to characterize state business cycles in this way. We find that states differ a great deal in the levels of growth that they experience in the two phases: Recession growth rates are related to industry mix, whereas expansion growth rates are related to education and age composition. Further, states differ significantly in the timing of switches between regimes, indicating large differences in the extent to which state business cycle phases are in concord with those of the aggregate economy. State recession probabilities (PDF) Quarter-by-quarter geographic pattern of national recessions 1979.I to 1983:II (PPT) 1989.II to 1992:II (PPT) 2000:III to 2002:II (PPT) The quarter being illustrated is indicated at the top of each slide. The number of quarters prior to or after an NBER recession is indicated at the bottom of each slide. States in recession during the quarter are shaded, those in expansion are unshaded. If the background is shaded, the country as a whole is was recession during that quarter.

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