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This always seems confusing to me. How are we not already in a recession? What specifically must happen to officially declare a recession? My savings (includin

This always seems confusing to me. How are we not already in a recession? What specifically must happen to officially declare a recession? My savings (including 401k) have gone down 24% since a year ago. Dinner at a restaurant / UberEats costs 30% - 50% more than a year ago. What else must happen to call it what it is?

jameshart 4y ago
Two successive quarters of negative economic growth. Stock market valuations and cost of eating out don’t factor into it.
mtoner23 4y ago
Read gdp decrease sustained. And increse in uneployment are good indicators. Not much is budging on either front. The economy is not based on uber eats costs.
- jjeaff 4y ago
  But funny enough, the fact that Uber eats costs so much is a factor of how much money people have and are willing to spend on a luxury service.
mym1990 4y ago
In the US, traditionally it has been marked by 2 consecutive quarters of declining GDP but I think the definition is moving away from that, in part because it is such a lagging indicator, and may not be representative of a lot of other factors within an economy. Generally though we are looking for a couple month period of time in declining employment, GDP, etc...overall health of the economy.
- Izkata 4y ago
  The official statement of whether we're in a recession or not comes from the National Bureau of Economic Research, and the definition has been more complicated since at least 2008: https://www.nber.org/news/business-cycle-dating-committee-announcement-january-7-2008 https://www.nber.org/news/business-cycle-dating-committee-an... > The committee places particular emphasis on two monthly measures of activity across the entire economy: (1) personal income less transfer payments, in real terms and (2) employment. In addition, we refer to two indicators with coverage primarily of manufacturing and goods: (3) industrial production and (4) the volume of sales of the manufacturing and wholesale-retail sectors adjusted for price changes. We also look at monthly estimates of real GDP such as those prepared by Macroeconomic Advisers (see http://www.macroadvisers.com http://www.macroadvisers.com). Although these indicators are the most important measures considered by the NBER in developing its business cycle chronology, there is no fixed rule about which other measures contribute information to the process.
datalopers 4y ago
> My savings (including 401k) have gone down 24% since a year ago Are you exaggerating or were you just extremely careless in your investments? S&P500 is down 1.4% and Nasdaq is down 11.0% since June 2nd, 2021.
- gigel82 4y ago
  I was comparing to peak, not specifically a year ago, my bad. Most of my savings are in index funds, specifically FNCMX and FFIDX. I know in very real terms the value of my savings is down 23.57% compared with November 23rd 2021.
wbsss4412 4y ago
In popular parlance, a recession is “economy bad” which is what you seem to be referring to. In technical terms, it’s strictly referring to the amount of production that is taking place in the economy, it has to be reducing. Your stock portfolio going down isn’t a recession, pricing for specific foods/services increasing isn’t a recession.
- jjeaff 4y ago
  And the economy is not doing bad by most measures. The stock market is only one component of the economy. Unemployment is at near record lows, there are 2 job openings for every job seeker. Wages are up. Profits are up for many industries. If all your assets are equities, you might not feel like you are doing that well. If your assets are in real estate, you are probably richer than you've ever been.
  - CogitoCogito 4y ago
    I personally wouldn't consider the huge increase in values of real estate an indicator of a healthy economy.
aserdf 4y ago
the rule of thumb i've always seen is "consecutive quarters of negative economic growth" - in other words, negative change in GNP (have seen GDP used as well) after accounting for inflation. since these indicators are always published after a time period has occurred and been tabulated, its possible we have crossed the threshold and are in a recession as we speak. Q1 2022 is estimated at -1.5% right now, the final number will be released on 6/29. Meaning Q2 final data will be released sometime around the end of September, to make it an "official" recession (if Q2 ends up being negative).
morninglight 4y ago
You have clearly answered your own question in unambiguous language. Unfortunately, unless you a a politician or a professional economist, your opinion will lose value even faster than your salary. .
justin66 4y ago
> My savings (including 401k) have gone down 24% since a year ago. If your 401k correlates much with the S&P 500 to some degree, can't you comfort yourself and get some additional perspective just by looking a few years back, rather than one?
lamontcg 4y ago
> Economists estimate that 325K jobs were added in May, down from the 428K increase in April. The unemployment rate is expected to improve slightly to 3.5% from 3.6% in April. https://seekingalpha.com/news/3845238-pace-of-job-growth-expected-to-slow-in-may-as-unemployment-seen-ticking-down https://seekingalpha.com/news/3845238-pace-of-job-growth-exp... There is no way in hell that we're currently in a recession with that kind of job growth and low unemployment.

jameshart 4y ago

Two successive quarters of negative economic growth. Stock market valuations and cost of eating out don’t factor into it.

mtoner23 4y ago

Read gdp decrease sustained. And increse in uneployment are good indicators. Not much is budging on either front. The economy is not based on uber eats costs.

jjeaff 4y ago
But funny enough, the fact that Uber eats costs so much is a factor of how much money people have and are willing to spend on a luxury service.

mym1990 4y ago

In the US, traditionally it has been marked by 2 consecutive quarters of declining GDP but I think the definition is moving away from that, in part because it is such a lagging indicator, and may not be representative of a lot of other factors within an economy. Generally though we are looking for a couple month period of time in declining employment, GDP, etc...overall health of the economy.

Izkata 4y ago
The official statement of whether we're in a recession or not comes from the National Bureau of Economic Research, and the definition has been more complicated since at least 2008: https://www.nber.org/news/business-cycle-dating-committee-announcement-january-7-2008 https://www.nber.org/news/business-cycle-dating-committee-an... > The committee places particular emphasis on two monthly measures of activity across the entire economy: (1) personal income less transfer payments, in real terms and (2) employment. In addition, we refer to two indicators with coverage primarily of manufacturing and goods: (3) industrial production and (4) the volume of sales of the manufacturing and wholesale-retail sectors adjusted for price changes. We also look at monthly estimates of real GDP such as those prepared by Macroeconomic Advisers (see http://www.macroadvisers.com http://www.macroadvisers.com). Although these indicators are the most important measures considered by the NBER in developing its business cycle chronology, there is no fixed rule about which other measures contribute information to the process.

datalopers 4y ago

> My savings (including 401k) have gone down 24% since a year ago Are you exaggerating or were you just extremely careless in your investments? S&P500 is down 1.4% and Nasdaq is down 11.0% since June 2nd, 2021.

gigel82 4y ago
I was comparing to peak, not specifically a year ago, my bad. Most of my savings are in index funds, specifically FNCMX and FFIDX. I know in very real terms the value of my savings is down 23.57% compared with November 23rd 2021.

wbsss4412 4y ago

In popular parlance, a recession is “economy bad” which is what you seem to be referring to. In technical terms, it’s strictly referring to the amount of production that is taking place in the economy, it has to be reducing. Your stock portfolio going down isn’t a recession, pricing for specific foods/services increasing isn’t a recession.

jjeaff 4y ago
And the economy is not doing bad by most measures. The stock market is only one component of the economy. Unemployment is at near record lows, there are 2 job openings for every job seeker. Wages are up. Profits are up for many industries. If all your assets are equities, you might not feel like you are doing that well. If your assets are in real estate, you are probably richer than you've ever been.
- CogitoCogito 4y ago
  I personally wouldn't consider the huge increase in values of real estate an indicator of a healthy economy.

aserdf 4y ago

the rule of thumb i've always seen is "consecutive quarters of negative economic growth" - in other words, negative change in GNP (have seen GDP used as well) after accounting for inflation. since these indicators are always published after a time period has occurred and been tabulated, its possible we have crossed the threshold and are in a recession as we speak. Q1 2022 is estimated at -1.5% right now, the final number will be released on 6/29. Meaning Q2 final data will be released sometime around the end of September, to make it an "official" recession (if Q2 ends up being negative).

morninglight 4y ago

You have clearly answered your own question in unambiguous language. Unfortunately, unless you a a politician or a professional economist, your opinion will lose value even faster than your salary. .

justin66 4y ago

> My savings (including 401k) have gone down 24% since a year ago. If your 401k correlates much with the S&P 500 to some degree, can't you comfort yourself and get some additional perspective just by looking a few years back, rather than one?

lamontcg 4y ago

> Economists estimate that 325K jobs were added in May, down from the 428K increase in April. The unemployment rate is expected to improve slightly to 3.5% from 3.6% in April. https://seekingalpha.com/news/3845238-pace-of-job-growth-expected-to-slow-in-may-as-unemployment-seen-ticking-down https://seekingalpha.com/news/3845238-pace-of-job-growth-exp... There is no way in hell that we're currently in a recession with that kind of job growth and low unemployment.