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You raise a good point, but not necessarily the one you intended. "Looming recession" is not an accurate characterization. "Possible recession" is, and frankly,

You raise a good point, but not necessarily the one you intended. "Looming recession" is not an accurate characterization. "Possible recession" is, and frankly, the probability might not be that high. On the one hand we see stories about the great resignation and blaming the government for overheating the economy and causing inflation. On the other we hear claims, based on limited evidence, that we're obviously heading into a recession.

sokoloff 4y ago
A recession is defined as a multi-month long period of declining economic performance. (Another common definition is two quarters in a row of negative growth.) Q1 real GDP growth in the US was negative. It seems quite likely that we're in the start of a recession by either of the definitions above, but we'll know with greater certainty in a little over a month when the advance estimate of the Q2 figure is released.
- bachmeier 4y ago
  I'm thinking more in terms of the NBER's definition of a recession. We're definitely seeing evidence of slower growth (which should lessen inflationary pressures) but it's far from clear to me that we're heading into a recession in the NBER sense. Gas prices could drop, supply chain issues could lessen, and we could be back to normal growth by the end of the year. "The NBER's definition emphasizes that a recession involves a significant decline in economic activity that is spread across the economy and lasts more than a few months. In our interpretation of this definition, we treat the three criteria—depth, diffusion, and duration—as somewhat interchangeable. That is, while each criterion needs to be met individually to some degree, extreme conditions revealed by one criterion may partially offset weaker indications from another. For example, in the case of the February 2020 peak in economic activity, the committee concluded that the subsequent drop in activity had been so great and so widely diffused throughout the economy that, even if it proved to be quite brief, the downturn should be classified as a recession." https://www.nber.org/research/business-cycle-dating https://www.nber.org/research/business-cycle-dating
- whimsicalism 4y ago
  Given that labor markets remained relatively tight while we had negative GDP in Q1, I think it is likely that labor markets will remain relatively tight even if there is negative GDP for this quarter. I think the term recession was not being used in the sense of "two quarters of real negative GDP" but in the more colloquial sense.

sokoloff 4y ago

A recession is defined as a multi-month long period of declining economic performance. (Another common definition is two quarters in a row of negative growth.) Q1 real GDP growth in the US was negative. It seems quite likely that we're in the start of a recession by either of the definitions above, but we'll know with greater certainty in a little over a month when the advance estimate of the Q2 figure is released.

bachmeier 4y ago
I'm thinking more in terms of the NBER's definition of a recession. We're definitely seeing evidence of slower growth (which should lessen inflationary pressures) but it's far from clear to me that we're heading into a recession in the NBER sense. Gas prices could drop, supply chain issues could lessen, and we could be back to normal growth by the end of the year. "The NBER's definition emphasizes that a recession involves a significant decline in economic activity that is spread across the economy and lasts more than a few months. In our interpretation of this definition, we treat the three criteria—depth, diffusion, and duration—as somewhat interchangeable. That is, while each criterion needs to be met individually to some degree, extreme conditions revealed by one criterion may partially offset weaker indications from another. For example, in the case of the February 2020 peak in economic activity, the committee concluded that the subsequent drop in activity had been so great and so widely diffused throughout the economy that, even if it proved to be quite brief, the downturn should be classified as a recession." https://www.nber.org/research/business-cycle-dating https://www.nber.org/research/business-cycle-dating
whimsicalism 4y ago
Given that labor markets remained relatively tight while we had negative GDP in Q1, I think it is likely that labor markets will remain relatively tight even if there is negative GDP for this quarter. I think the term recession was not being used in the sense of "two quarters of real negative GDP" but in the more colloquial sense.