The committee looks for depth, diffusion and duration across real personal income less transfers, non-farm payrolls, household employment, real consumer spending, real manufacturing and trade sales, and industrial-production. No single series decides it and no formula is published.
Peaks and troughs are dated by month rather than quarter. The long announcement lag means the dates are useful for research and useless for trading: the 2020 recession's trough was declared more than a year after the market bottom.
Example: the committee names a peak in month zero. It announces that decision in month eleven, by which point equities have already fallen 25% and recovered 15%.
Related: recession, business-cycle, industrial-production, leading-indicator, data-revision