I am a current college student who is fascinated by economics and math.
An easy way to improve the quality of your economic or financial graphs is to add recession bars; they enhance both the professional look and usefulness of your graph.
The common way people add recession bars is simply by drawing colored rectangles over your graph, but if you later want to add more data or even resize the graph, you're going to have to resize all of the rectangles, and you're probably going to make a mistake anyway!
The following method lets you resize your graph or add data on the fly while preserving the look, and more importantly, the accuracy of your graph.
Step 1: Find a Time-Series Data Set
A time-series graph is any graph that has a sequence of data points corresponding to a sequence of time points. Monthly unemployment, quarterly GDP, and weekly claims for unemployment insurance are all common time-series publicly available online.
This tutorial assumes you know the basics of graphing a time-series. If you don't have a time-series, want a refresher, or want to make one real quick, see How to Graph a Time Series in Excel.
Once you have your data, add a new column (or row) called Recession Values. You should think of this as any other time-series in that each value will correspond to one date. For now, fill that entire column with -1.
(Short Cut: If you put -1 in the top entry and then highlight that cell. Press and hold "Ctrl" + "Shift" and press "End." Now let go. Press and hold "Ctrl" and press the letter "D". The entire column will have filled with -1.)
Step 2: Get Recession Dates
To find Recession Dates, go to the National Bureau of Economic Research Business Cycle Dating Committee's webpage http://www.nber.org/cycles/cyclesmain.html.
They are the official word on when a recession began and ended. Roughly speaking, the column labeled "Peak" is the turning point into recession; the column labeled "Trough" is the turning point out of recession. These are the dates you need to use to position your recession bars.
(Note: You may disagree with their definition of a recession, but they are the standard; everyone uses their dates.)
Step 3: Input the Recession Dates
This step is not fun, but you only have to do it once and you can reuse the data to add recession bars instantly to any graphs you want.
In your excel spreadsheet, under the "Recession Values" column, put a 1 for dates that correspond to the recession. For example, my data starts in 1950 so the first relevant recession is July 1953–May 1954. I then put a 1 for all dates from (and including) July 1953 to (and including) May 1954. This is illustrated below.
Step 4: Plot Your Graph
Plot a line graph with all the series you want to include and the "Recession Values" series. You can start to see how our recession bars will work.
Step 5: Change Axis
Right-click the Recession Values series (in my case it's the red line).
Select "Format Data Series..."
In the "Series Options" Tab, choose "Plot on Secondary Axis."
Step 6: Change Chart Type
Again, right-click on the Recession Value Series.
But this time, select "Change Series Chart Type" And select the basic Area Graph chart.
Step 7: Change Secondary Axis
Right-click on the axis on the right. This is the secondary axis.
Select "Format Axis".
On the "Axis Options" Tab make the minimum a fixed .5 and the maximimum a fixed .51
This corresponds to the first two rows of the screen shot on the right.
Step 7: Make the Recession Bars Useful
Now we need to make the recession bars unobtrusive so they don't make it difficult to read our other data series.
Right-click on the Recession Values series. (they should look roughly like recession bars at this point).
Select "Format Data Series"
In the "Border Color" tab, select "No line"
In the "Fill" tab, select "solid fill." Here you can select the color of your Recession Bars and also the transparency. I usually go for a medium red or purple color and have transparency of around 40%.
Step 8: Make the Graph Useful
Add titles, axis labels, make your fonts bold and legible. Do anything you normally do to make your graph look good.
Step 9: Remove the Secondary Axis Labels
The secondary axis is necessary to have our recession bars, but it is ugly and not useful in any way so why not make it invisible.
Right-click on the right-hand side axis.
Select "Format Axis."
In the "Axis Options" tab, set "Major tick mark type", "Minor tick mark type", and "Axis Labels" to none.
Remember that the series you created for the recession values can be copied and pasted into any data set you have.
Comments, suggestions, or questions are very welcome.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
M. on September 12, 2018:
Very helpful!! Thank you!
Jon Peltier on January 05, 2018:
Using an area chart type for the shaded regions may result in trapezoid-shaped shadings, narrower at the top and wider at the bottom. In your example, there are so many time points that the sloped sides are still nearly vertical, but for some cases it will not look good.
To fix this, use a column chart type, with gap width of zero.
Yu on April 30, 2012:
It really helps. thanks very much!!!!!!!!!!
InflationEditor on April 09, 2012:
Very interesting. I do it differently and I think it takes fewer steps. For instance in my Historical Unemployment Chart http://unemploymentdata.com/charts/employment-data... I just choose the highest value on the left hand scale (in this case 160 Million and put that in all the data points where there is a recession, once the chart is created right click on the data series and change it to a bar graph from a line graph and adjust the color etc. This way there is no messing with the right hand scale.
Zazuzu (author) on May 31, 2011:
@Siji and @Lee Mack
Glad you liked it! Let me know if you have any trouble implementing the technique.
Zazuzu (author) on May 31, 2011:
Thanks! You can definitely use this for "tagging" all kinds of data. In the future, I might post a couple different techniques for tagging other types of data.
Zazuzu (author) on May 31, 2011:
What I mean by recession bar is all of those pink lines on the graph at the top of the page. Those lines are denoting the time periods in which the US economy was in a recession. The left side of each pink line is the start of a recession; the right side of each pink line is the end of the same recession.
Lee Mack on May 30, 2011:
A very elegant solution indeed. For someone who has a hard time getting these things right this makes it a lot simpler.
Siji on May 30, 2011:
This is an informative article.Your techniques are very helpful.
LJ Tucker on May 30, 2011:
Nice solution, and a very clear explanation.
I don't work with a lot of time series, but your technique will help me with some other applications where I want to graphically "tag" a subset of my items.
Suhas on May 30, 2011:
The article is nice but may i know what is meant by recession bar.