In this problem, you will use actual data to study stylized facts about U.S. employment. Use data from the Federal Reserve Economic Database (FRED) available from the Federal Reserve Bank of St. Louis website (http://research.stlouisfed.org/fred2/categories). Download seasonally-adjusted monthly total non-farm employment in an Excel file fromJanuary 1948 through October 2012.1Total non-farm employment (series ID: PAYEMS) can be found under Population, Employment & Labor Markets \ Current Population Survey (Household Survey) \ Employment. Use the search option and series ID to find the correct data quickly.

Next, go to the National Bureau of Economic Research (NBER) website to find information about starting and ending periods of business cycles in the U.S (http://nber.org/cycles/cyclesmain.html). In particular, obtain the month corresponding to the trough of the cyclefor each of the last six recessions(i.e., the month when a given recession period ended. For example, the 2007-09 recession ended in June 2009. Beginning and ending times of business cycles are provided in the first two columns of the top table).

After you have determined the trough dates for each of the last six recessions, you need to:

- calculate thecumulativegrowth rate of employment for each of the 40 months following the end of each recession.

The statement above outlines your task. If you want more details about how to do this, consider:

(i) first calculate the month-to-month growth rate for total non-farm employment100

,

1 1

starting on the month after the trough (e.g., for the 2007-09 recession, this would be the growth rate

between June 2009 and July 2009);

(ii) then, do the same for each of the next 39 months (i.e., for the particular example of the 2007-09

recession, the next 39 growth rates correspond to the growth rate between July 2009 and August 2009, the growth rate between August 2009 and September 2009, etc.);

1To the extent that the current recession is still ongoing, we cannot evaluate the recovery of employment yet. Therefore, we will keep our focus on the 6 recessions prior to the current one. I strongly encourage you to revisit this exercise in a few months, once the recession is officially over.

(iii) finally, for each monthtafter the trough date, obtain the cumulative (or accumulated) growth starting the month after the trough of the last recession and up until the growth rate at montht. Notice the cumulative growth rate at monthtis defined as the sum of all monthly growth rates up until the growth rate in montht.

For example, if the growth rate between June 1910 and July 1910 is 0.5, the growth rate between July 1910 and August 1910 is 0.25, and the growth rate between August 1910 and September 1910 is 0.1, then, the accumulated growth rate up until July 1910 is simply 0.5, the accumulated growth rate up until August 1910 is 0.5+0.25=0.75, and the accumulated growth rate up until September 1910 is 0.5+0.25+0.1=0.85.

In the end, your Excel file should contain cumulative growth rates of total non-farm employment for each of the 40 months after the trough of each of the last six recessions, as in the table below (which contains the cumulative growth rates for the first five months after the trough of the 2007-09 recession, as an example.