As I grow old, I grow to be more and more annoyed with having to repeatedly push again towards broadly held myths. A kind of myths is {that a} recession happens when there are two consecutive detrimental quarters for actual GDP development. That’s not how the NBER determines recessions. (One apparent instance is 2001, which noticed a recession however didn’t see two consecutive detrimental quarters.)
Some individuals are actually making a giant deal of the truth that the Atlanta Fed’s GDP tracker is at the moment predicting a detrimental 2.1% actual GDP development fee within the second quarter. (Following a detrimental 1.6% development fee in Q1.) Even when that forecast pans out, it doesn’t imply the US economic system was in recession all through the primary half of 2022—an absurd declare—slightly it means that six-month adjustments in RGDP will not be a dependable indicator of enterprise cycles.
Not solely was the economic system not in recession in early 2022, it was experiencing essentially the most overheated increase in lots of a long time. Contemplate that payroll employment soared by roughly 2.5 million throughout the first 5 months of 2022, roughly 3 times the traditional fee of development. That’s a number of the quickest job development we’ve ever seen. And corporations have been nonetheless desperately wanting employees.
That’s to not say the US economic system won’t at the moment be coming into a recession. Maybe the payroll employment information will quickly flip down. It’s even doable {that a} recession started a month in the past. However the US economic system actually wasn’t in recession this previous winter.
