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The reason the government defines the recession as 4 months is because we did not see two quarters of GDP decline as much as we saw 4 months of it. Shift the q
by RC_ITR 4y ago
The reason the government defines the recession as 4 months is because we did not see two quarters of GDP decline as much as we saw 4 months of it.
Shift the quarter to begin in Feb and you'd only have 1Q of decline.
That is why the 2 quarters rule is stupid and why 2020 doesn't fit the rule.
- rory 4y agoIt clearly does fit the rule because the year doesn't start in February. There's no need to change reality so you were right. It's just a rule of thumb, not some profound maxim of economics.
- OJFord 4y agoThe point is that if all the bad happened in half the quarter, that can make quite a difference, and the quarter start/end date is entirely arbitrary. That said, you can apply the same to GP's suggestion of months, if the timescales are even shorter.
- rory 4y agoYeah, the cutoff points for any rule of thumb are going to be fairly arbitrary. I don't understand why people are treating this like a profound observation.