Economic Report of the President

The behavior of real GDP is similar in the 1990s and current expansions,but both are different from the average prior expansion. In particular, realGDP has risen less robustly during the last two expansions than it did, onaverage, in the other expansions since 1960.In the average contraction prior to 1990, the level of real GDP reached itspeak approximately four quarters before the eventual trough; in the 1990-1991 contraction, GDP reached its peak two quarters before the trough.There were no consecutive quarters of decline in the most recent contraction,with revised data showing that real GDP dropped in the third quarter of 2000and the first and third quarters of 2001, but grew in the intervening quarters.ConsumptionThe largest component of GDP, real personal consumption expenditures,shows a similar pattern (Chart 2-2). Consumption behavior during the lasttwo expansions has been almost identical, with the two recent expansionsdiffering from prior expansions.In the prior recessions, on average, consumption growth moderatedstarting six quarters before the recession’s eventual trough, did not actually falluntil two quarters before the trough, and began to rise in the quarter beforethe trough. In the 1990-1991 recession, consumption rose rapidly until twoChapter 2 | 51