Recessions and Recoveries in New Zealand's Post-Second World War Business Cycles

We compute classical real GDP business cycles and growth cycles, contrast classical recessions with 'technical' recessions, and assess the sensitivity of our peaks and troughs to data revisions. Calling a technical recession after two successive quarters of negative growth can provide conditionally useful information. However, it can also signal beginning and end points for a recession that are somewhat different from those computed by our Bry and Boschan algorithm. Expansion and contraction phases of classical real GDP and employment cycles have, on average, had an 89% association, but individual cycle circumstances should additionally be assessed. New Zealand's average pattern of recovery has differed from that for U.S. NBER cycles, but their most recent recession and recovery paths have been unusually similar. We also assess whether strength of recovery can be explained by length, depth or severity of previous recessions. From our classical real GDP turning points, New Zealand's most recent recession commenced with the March 2008 quarter and ended with the June 2009 quarter. The duration of this six-quarter recession has been somewhat longer than the average recession of 4.3 quarters; but its 4.0 percentage depth has been considerably less than those for the 1951/52 and 1948 recessions, somewhat below that for the 1976/78 episode, and marginally less than the average depth of 4.1 per cent. In terms of overall severity, a measure which reflects duration and depth, this recession has been New Zealand’s fourth most severe. Its cumulated GDP loss of 11.5 per cent has been greater than the average loss of 10.4 per cent, but less severe than the losses for 1951/52 (37.2 per cent), 1948 (15.6 per cent) and 1976/78 (12.8 per cent). The recovery path from New Zealand’s most recent recession has differed from those of previous recoveries.