US Gross Domestic Product, Second Quarter 2022 (Advance Estimate)
bea.gov
bea.gov
I think we all know that if a Republican were President the entire narrative would shift, with most of the press saying we're in recession while Fox, etc would say unemployment is still low which is what matters.
How did we get to a point where actual data can be outright denied or absorbed based on your political viewpoint? It's really pathetic. People will go to the ends of the earth just to protect politicians. Worse, even if we're in recession it's pretty mild, so I don't even know why there is so much handwringing about it.
>How did we get to a point where actual data can be outright denied or absorbed based on your political viewpoint?
Because the actual data is sending mixed signals. People equate recessions with job losses, but job growth is still high and unemployment remains incredibly low. Businesses equate recessions with reduced demand for goods and and services, yet demand remains strong enough to push prices and profits to record levels.
GDP has long been criticized for being a poor metric for the economy. But it's always been correlated enough with overall economic sentiment that it was Good Enough. It looks like we've finally gotten ourselves into a situation where the edge case issues with GDP surface.
Lastly, not everyone feels recessions the same. I was one of those people who benefited from the financial crisis, because I kept my job and lived in an apartment, so my income was going up while my costs went down. That doesn't take away from the devastation it caused to other people.
Take for example the U-3 unemployment number that you cite, what is missing from that is Workforce Participation, we have a pretty large drop-off in Work force participation which is leading to the false belief that employment is "fine", and the quote "mix signal" of being in a recession while still having lower unemployment.
Completely absent from most of these older metrics is the "gig-economy" which is really screwing with the data IMO.
Then you have U-6 Unemployment increasing while U-3 is dropping, I think U-3 is just a few months away from reversal and will start increasing soon
>>GDP has long been criticized for being a poor metric for the economy.
yes by MMT supporters that want to ignore the classic model of economics in favor of monetary manipulation for political purposes
>> yes by MMT supporters that want to ignore the classic model of economics in favor of monetary manipulation for political purposes
Huh?
Discussing the utility of and then issues with GDP has been a staple of Macro courses for decades. E.g., [1], but I'm really serious: every single macro textbook for as long as macro textbooks have existed has had some version of the question "Discuss the strengths and weaknesses (i.e., problems) of using GDP data".
On the other hand, the stock market is down this year, so if that's your definition, things are dire.
Honestly, this seems like stagflation to me, which has been historically known for breaking the definition of "recession".
Neither side wants to say that out loud, because it implies a decade-plus economic funk.
that sounds like a depression, not a recession
The biggest actual policy disagreement between MMT and mainstream economics is how to achieve full employment. Mainstream economics primarily reaches for monetary policy (tweaking the interest rate), MMT primarily reaches for fiscal policy (create/spend money to give everyone a job).
I don't feel particularly strongly about one side versus the other, but we end up doing both anyways and our current model of changing the interest rate (i.e. recent rate hikes) out of lockstep with corresponding fiscal spending (i.e. Build Back Better) is inefficient when the two need to be kept in balance.
No, we don't.
While the LFPR is still down from the point it was prior to the 2020 recession, it has been continuing to increase fairly consistently after it's sharp rebound from the trough of that recession.
https://www.bls.gov/charts/employment-situation/civilian-lab...
Sure, but the statement I made was job growth ways high AND unemployment remained low. The AND is important for the very reason you point out; U-3 is not a useful stand alone metric. Combining it with job growth data helps provide a better picture of the job market.
Employment still grew by 375,000 jobs last month. This was far above expectations.
> yes by MMT supporters that want to ignore the classic model of economics in favor of monetary manipulation for political purposes
It's been said that a cancer patient going through an expensive divorce is the best contributor to GDP.
You don't measure the health of a human by looking at their weight on a scale. When you go to the doctor for your annual checkup, they'll measure your BMI, blood pressure, body temperature, resting heart rate, and look at a few other indicators to get a very rough estimate of your overall health and how it compares to last year.
GDP is one indicator among many to measure the health of the economy. An important one, yes, but looking at GDP without also looking at employment figures, inflation data, the markets, etc. would be tremendously silly.
Everyone is still very desparate for employees, so I don't think Workforce Participation is low because there aren't enough jobs and people are discouraged from the work force. Baby boomers are currently aging out of the job market at a n accelerated rate, so that must be one of the reasons (U-6 doesn't include that though). I think the current drug disaster is another (a lot of people are simply unemployable), but I'm not sure how to measure that.
https://en.m.wikipedia.org/wiki/Felony_disenfranchisement_in...
It’s not the result of decreased hiring due to economic slowdown. It’s the opposite entirely; this is a contributing factor to the labor shortage.
This isn't true, major retailers have been reporting falling demand.
I'd cite the WSJ but for some reason I can't paste the link in this box, just Google "falling demand Wal-Mart"
> enough to push prices and profits to record levels.
Adjust both for inflation
I think Walmart's story in particular is one of stupidly bad demand forecasting.
It is mostly discretionary spending that is down; Wal-Mart reported the largest fall in apparel iirc, but demand is demand. One would expect discretionary spending to fall first, and hopefully it stops there.
Again I apologize for not providing a direct citation due to my dumb mobile browser but these are days-old news stories and it should be easy to confirm
I think it's unrealistic to expect retail goods to maintain the same highs they had during the pandemic. For a big chunk of the last two years, people couldn't go to concerts, bars and restaurants operated at limited capacity, vacation destinations had travel restrictions in place, etc. This lead people to take the discretionary income they would normally spend on those things and put it into retail goods that improve their lives stuck at home. TVs, game consoles, what have you. Now that restrictions are essentially nonexistent in the US, people are returning to those pre-COVID activities.
As OP said,
>> and services.
> Wal-Mart
WalMart's issue is that they have a massive inventory/demand mismatch. They already have the headwind of a shift from goods to services, and then on top of that they also massively mismanaged a shift in consumer preference within goods. I have a feeling that they are also feeling the squeeze from Amazon. Many households treat Prime as a fixed cost but the 20 minute drive out to Walmart is a real expense that can be substituted with Amazon purchases. Tonight's earnings will be interesting.
Compare to eg Visa [1].
I expect that the "last hoorah" spending of this summer will grind to a halt in the winter and by Q2 2023 we'll be able to see a massive decline in consumer spending during Q4 in particular.
But we aren't there yet, at least in aggregate, because consumers are spending like mad on services.
[1] https://www.reuters.com/business/finance/visa-quarterly-prof...
I'd rather not base my picture of the entire economy around a single retailer. What's going on with other retailers? Amazon, Best Buy, Target, etc? Have they more than picked up the slack that Wal Mart is seeing?
Or retailers in general. Retail spending is down because services spending is up -- people are going to the beach and buying plane tickets instead of buying TVs and patio furniture.
Regardless of whether we're in a recession, retailer numbers aren't a good indicator for the duration/depth/type. We spent all of 2020 hearing that demand was pulled forward. Well, it was pulled forward from somewhere, and now we are there.
> What's going on with other retailers?
Best Buy missed by a lot; sales down by over 10%; forecast was a 1% contraction.
Amazon tonight. Always complicated because of AWS, digital content, and now a substantial advertising business. If you want the retail details you have to go past the headline numbers.
Target in mid-August but expectations are similar.
My guess is that none of those companies will be hit has bad as Walmart because (1) Walmart was just particularly badly mismanaged, and (2) these other companies are just different in kind (particularly Amazon -- they could eg suffer retail losses while beating estimates on Advertising/Cloud)
>Regardless of whether we're in a recession, retailer numbers aren't a good indicator for the duration/depth/type. We spent all of 2020 hearing that demand was pulled forward. Well, it was pulled forward from somewhere, and now we are there.
All fair points.
>Best Buy missed by a lot; sales down by over 10%; forecast was a 1% contraction.
Ouch.
We could even enter a prolonged, severe recession with low unemployment. How? Labor force participation. If it is low enough, there aren't jobs to cut.
Your last point is very valid, and much is a matter of perspective.
As far as mixed data... the only data throwing a contrary signal is unemployment, previously discussed. Inflation, rising interest rates, low consumer confidence, home prices turning over (speculative market areas currently), supply chain issues, and loss of wealth effect (markets have lost approximately $30 trillion this year), are all VERY recessionary.
The data isn't mixed, people are just making an incorrect association.
Working more or longer isn't a good thing in its own right. In fact, it is bad it you are working more for less purchasing power.
employment growth has historically been associated with increased purchasing power, but the current situation is a deviation from this norm.
Talking about employment growth ignoring this fact is a bit of a bait and switch playing on this incorrect association.
The definition of "recession" doesn't depend on what other things people think happen during a recession.
No one would be making this argument if it had happened while Trump was in office.
It absolutely does depend on the factors that NBER has always looked at to judge recessions, like employment.
> No one would be making this argument if it had happened while Trump was in office.
That's a nonfalsifiable statement that does nothing but show your own political bias.
It's political bias to notice that people behave politically?
Is it political bias to notice Republicans complain about the deficit when Democrats are in power or is it only political bias to notice that that Democrats complain about the deficit when Republicans are in power ?
That said... my wealth manager has been and still is waffling when I ask him if we are in a recession. It's NOT just political; I don't even know my wealth manager's politics and I have absolutely no doubt he puts fiduciary responsibilities first and makes fact-based assessments.
Unemployment is low and the trend is mostly flat. Housing is doing fine. Consumer balance sheets are strong. Are we entering a recession? I think so. But there are a lot of "but"s which really do impact how smart and impartial people are thinking about where and how to deploy capital.
When I ask my wealth manager "are we in a recession?", he basically says "We might be in a recession. We might not be in a recession. Either way, we should not invest as if this is a typical recession."
Which I think pretty much sums things up.
Consumer debt is at record highs for overall debt, and household credit card debt is climbing towards record levels.
https://www.google.com/amp/s/www.cnbc.com/amp/2022/05/10/hou...
https://www.google.com/amp/s/www.cnbc.com/amp/2022/05/10/con...
Also keep in mind that those debt figures are in nominal USD. One positive effect of inflation is that it reduces the real cost of paying off debt.
GDP numbers are back up? Great - except that's just higher because the handful of companies that can really capitalize on 0% interest rates are doing so. Everyone else is still down from 2007.
Unemployment is falling? Great - except that those people are leaving the labor force or taking lower-wage jobs than they had before.
There's all sorts of ways that the headline numbers can hide the discontent of a large group of people under the rug. And likewise this can happen in the opposite direction. The economy as a whole can be screwed over in ways that happen to give small business owners or the working class more negotiating leverage or a greater share of the pie.
I also remember the whole expansion preceding the Great Recession, during which the bottom three quintiles all did worse, the second-to-top was basically flat, and most of the gains were in a narrow segment at the top of the top quintile.
“Recession“ vs “expansion“ (multidimensional as it is) is still not, and not intended to be, the same as any individual person’s, or even the median person’s, experience of the economy.
As pointed out by another commenter the NBER has never failed to declare a recession after two consecutive quarters of GDP reduction. This is a preliminary report, I would expect them to wait for the full report to actually declare it.
These things work a certain way. Whether that way is good or bad isn't relevant to this particular point, by expecting that way to change on a whim you're just being impatient.
That isn't 100% accurate. There is 1 example from 1947 where we had two consecutive quarters of negative GDP, but positive jobs, positive industrial production and positive consumer spending and NBER doesn't consider it a recession.
2001 was the opposite. It was called a recession without consecutive 2 quarters of negative GDP growth. [1]
[1] https://en.wikipedia.org/wiki/Early_2000s_recession#/media/F...
Also 2020, and that wasn't even two down quarters with a gap; the whole recession was 2 months long.
No one is avoiding saying the word "recession". The current Executive Branch and Federal Reserve are both avoiding saying we are in a recession.
My impression is that layoffs have been mostly isolated to tech at this point. I do know a couple of recruiters (outside of tech) who've been laid off lately, so that could be the canary. But my impression is that all of the quantitative labor market indicators we have are still strong - likely stronger than we've ever seen in a recession.
Instead what we're getting is "holistic criteria" which means pundits can argue on TV for hours (which they probably love to) and everybody gets to keep their partisan views and there's no objective meaning to any terms anymore. No wonder people have low confidence in "experts" and grasp at whatever they find on the internet to find some clarity.
Even with a complex formula, you're still dropping the useful details.
Even with a predictable complicated formula, you still have the question to debate: "does it matter?"
This is like saying sure you can't buy as much bread, but at least you are working longer.
The fact that more people are working to produce less than before describes an economy in decline.
What am I missing here?
Poor people can be doing better while rich people are doing worse. Since economic activity is mostly about how the ultrawealthy are doing, there's always a recession when they're doing badly
Fewer workers = less production.
Fewer people looking for work = low unemployment.
This is such a weird information play. Recessions are defined after the fact by NBER. Always have. Always will be. There’s no set criteria.
Informally people cite the two quarters rule, but 2/5 past recessions (2000 and 2020) don’t follow that rule.
No one wants to communicate that nuance so we get mass confusion.
Sad to see that confusion even exists in HN.
What’s actually concerning to me is exactly that: every nuanced discussion in politics is now some gotcha where a reporter asks “yes or no” to a question that has a detailed answer.
Also, Powell himself has been iffy about whether or not we're in a recession
That's because all politicians are liars and the media spin doctors will ensure that their lies gaslight the general public into believing them. The problem is, they can't deny the numbers and they know it, hence why they are beginning to change definitions.
Given the last administration brought the US into a recession 2 years ago with the same opposition, media and critics screaming at them, there is no more denying that this is a recession with these figures. The difference is, the current administration is trying to escape by changing definitions, which doesn't give much confidence in them and indicates that it may get even worse.
Now you see the same ones down-playing the inflation fears in November 2021 are trying to down play this recession very poorly with lots of damage control to save themselves and their careers. In reality we were no better off, and it looks like this is worse than the last administration.
And finally, the indicators for this with surging inflation was there since November 2021. Instead we have 'Stock market up 1% today on both this news and decades-high inflation.' [0] and later 'We are most certainly not in a recession.' [1]. Not only you have to look at it in the long term - not in 1 day, but you also don't wait for the figures to come out for you to then prepare for the worst. By then it is too late.
The denial is indeed pathetic.
The press is one of the most loathed things in the country and they always seem to dig their grave even deeper.
To run a counterpoint though, recessions are self-reinforcing. I think what the Fed has tried to do with all its might is to keep the picture as rosy as possible. Once it is officially out there, companies start cutting budgets, people tighten their wallets anticipating harder times, and it just kind of goes in a few cycles like this.
Our elites—I don’t mean that pejoratively, but descriptively—used to adhere to institutional values. When I joined a prominent NYC law firm 10 years ago nobody commented on the fact that it was named after someone who argued the pro-segregation other side of Brown v. Board. The institution, not only of the firm but the legal process itself-where even segregationists are entitled to their day in court—was a credo that transcended individual politics or individual notions of “justice” or “human rights.”
That flipped sometime in the last decade. Our institutions have been overtaken my millenarianism: https://en.wikipedia.org/wiki/Millenarianism. It’s a belief system that transcends institutional values—in the law, the media, everywhere.
Do you remember “The Resistance?” Where Clinton-supporting government employees pledged to work within the bureaucracy to defeat the agenda of the duly elected President—their boss? The craziness we’ve been seeing from conservatives lately is a reaction to that total abandonment of institutional values.
That’s breaking down in America, and politics here is increasingly reminding me of politics on the subcontinent.
Ideologies tend to deal in binaries. We are either in a recession and the sky is about to fall or everything is great. Jobless recoveries or full employment recessions don't fit into binary narratives.
Also, his latest tweet on the subject seems pretty balanced: https://twitter.com/RBReich/status/1552739457433972737?ref_s...
and yes fox news is right leaning but atleast they’re open about it. and a 10% drop after a 2x increase isn’t that exciting
I like to believe that there is a bigger picture here. Oversimplification: An economic downturn when there is a rise in nationalist sentiment had given birth to people like hitler.
Maybe if the majority perceives that everything is fine, when it isn’t, might help prevent that?
That makes two back-to-back quarters of real GDP contraction. To some, this is a recession, but it's the NBER that puts the stamp on it. AFAIK, NBER has never failed to put the recession stamp on back-to-back drops in GDP.
It's worth noting that yield curve inversion predicted recession four months ago:
> The 2-year and 10-year Treasury yields inverted for the first time since 2019 on Thursday, sending a possible warning signal that a recession could be on the horizon.
https://www.cnbc.com/2022/03/31/2-year-treasury-yield-tops-1...
It's also worth noting that 2y-10y yields have been deeply inverted (~20 basis points) for most of July and are in that state today.
Still one more thing to note: the earliest warning signal of them all appears to be an inversion of the eurodollar futures curve:
https://www.reuters.com/business/finance/eurodollar-futures-...
It started inverting last year. The inversion steepened. It is now in a very deep inversion in the long end that is marching steadily to lower maturities.
This is something that everyone who is actually interested in the topic will have heard of because it's been mentioned repeatedly by the experts. And yet this thread is filled with confident statements by people who clearly have put zero effort into forming their opinion. Sad.
It's funny when you read so many people on HN talk about others speaking outside of their areas of expertise when someone is talking about tech and then come to articles like this where a bunch of programmers try to sound like experts on the economy. Hubris is not in short supply.
* China is still purusing zero COVID.
* There's a land war in Europe with Russia effectively cut off from the Western world.
* German manufacturing, once a workhorse, is being crushed by energy costs
* much of the developing world is swimming hard against the current just to stay alive.
I don't think we are in a situation analogous to 1947, of course, and I do think we are in or at least heading into a more-than-technical recession. But "irrelevant because that only happens after once in a lifetime extremely disruptive events" is a pretty... odd... take in 2022.
And—relatedly—a once-in-ever declaration of a recession of less than one quarter, because of how uniquely sharp the decline in output, employment, and all the recession-relevant measures was, even though it quickly reversed direction due to stimulus and other policy responses.
So it's kind of weird people today pretending that the 2-consecutive-doen-quarter thing has always been an ironclad definition of a recession.
Hmm, maybe Germany can solve this the same way they "solved" ballooning Berliner rents: just pass a law saying how much energy should cost. Simple. They do love regulations over there.
Or just ask Gerhard Schröder and the rest of their former chancellors who were in bed with Russia, to blow their hot air through the pipes this winter. They have enough of it.
The comment you replied to gave evidence that directly contradicts the OP comment.
This Twitter thread has details:
https://twitter.com/bencasselman/status/1552411779040419841
The comparison between an economy transitioning from war footing and one transitioning from pandemic footing might be relevant.
So? The NBER business cycle dating work covers back into the 19th century, even if some of it was done retrospectively. If anything, the fact that it applied it's methodology this way to times when there could not possibly have been any policy impact to its decisions just further undermines the idea that exceptions to the 2-consecutive-down-quarter rule are about current political convenience.
> And 1947 marked the first year the US produced a quarterly GDP report.
NBER was doing income and product reports before the government did, the government actually directly was motivated by NBER’s prior work in starting to do them.
We're in an environment of very rapidly rising short-term interest rates, specifically as the Fed attempts to try to manage inflation; with back-to-back 75 bps increases. That tends to have a curve flattening effect as the yield curve is nominal; short term yields rise more than longer tenors if the market believes that inflation will decrease as real yields will be higher.
At least at some point, in order to bring a country out of the recession.
The two areas in which it does have a mandate are price stability and sustainable employment. Usually, recessions are accompanied by a loss of jobs, so that's where the Fed would intervene; that isn't happening thus far which is another reason why economists are split over what is really going on in the economy.
Not dramatically though, a more charitable view would say that employement levels are fairly flat.
Correct. And yet they let inflation get this bad, so it seems like they're trying to avoid recessions even though they haven't been told to.
https://www.federalreserve.gov/monetarypolicy/fomccalendars....
So, people are accepting fewer, apparently better employment offers, manufacturing is being onshored, but (due to lower supply of foreign slave labor and exploitable US workers) profits are down, and inflation is up.
Since unemplyoment is low, the Fed mandate seems pretty clear at this point. Interest rates should go up. The market will tank for a few years because inflation and paying workers screws with profits, then bounce back (in real terms) once corporate debt, etc unwinds, and productivity starts to rise again.
Rigid and weak corporations will be displaced by startups and existing companies that are able to adapt/innovate.
It's weird to me that Fox News's staunchly anti-China, pro-US manufacturing Fox News's viewership is so bent out of shape.
Aren't we experiencing exactly the effect Trump's tariffs were supposed to achieve?
In reality, there is a case for tariffs on China that has nothing to do with trade deficits. Biden can't just end them because it will make him look soft and let them off the hook for IP theft and other abuses. Really the president should not have this authority at all, Congress should be doing it.
Carter appointed Volcker and put America on chemotherapy. He caught blame for both inflation and de-leveraging withdrawal symptoms. Reagan got to take America off chemotherapy and take credit in the popular conscience for both reduced inflation and the re-leveraging boom. The political lesson: putting America on chemotherapy is important but politically somewhere between "thankless" and "suicidal."
When Powell was confirmed, it was with this context in mind. Politicians were thinking "do I want to be the next Carter"? I am worried that they only confirmed Powell because they thought he would not be the next Volcker. Of course, now that he has been confirmed for the next 4 years, he has some freedom to diverge from expectations. We'll see.
With today's federal debt level the fed is screwed: it cannot raise rates even close to inflation without busting the budget and cannot lower them (to fight a recession) without spiking inflation.
My bet is on long term rates-below-inflation period to deflate debts, similar to post-war period in the 1940s. And lots ofrhetoric. But it will be a painful ride.
Then everyone can run a balanced budget and watch their debt melt away.
The reason why we have price controls aka the zero lower bound of interest is that we would rather become eternal debt slaves (money supply has always been growing exponentially even under a gold standard) than face nominal losses that force us to face an umcomfortable truth that from this point onwards you will never earn anything again from owning abundant physical capital and that you will have to work for your own money instead of making others work for it.
I think the Fed knowing that history will try to kill it dead first time, because if they don't they know they'll likely have to go even higher with interest rates at the second attempt and the higher they're forced to go the more danger there will be to US financing operations as you say.
Recessions have weak employment (that's one of the most important factors NBER looks at to determine recession, among the key reasons they have declared two of the last three recessions without two consecutive down GDP quarters, and one of the key reasons the present two consecutive down GDP quarters is arguably not a recession.)
The Fed dual mandate relates to price stability and full employment (it doesn't independently consider recession per se.) It typically lowers rates in a recession to nudge back toward full employment.
Employment remaining strong and inflation remaining high, thought, it raises rates, even if some people think it may be a recession.
We’re not going to land on either extreme but I think it’s clear which is the preferred option.
Can anyone enlighten us non-specialists as to how that particular contract works?
After all, this is a recession. Inflation is comically high - despite the incredibly massaged CPI number. The third and last criteria for stagflation is high unemployment, which it seems like we're heading into as soon as this last post-lockdown boom in consumer spending falls off a cliff.
Stagflation is very scary and it's going to be either the end of the USD, or further raising rates into a recession. Either way will produce untold suffering and cost hundreds of thousands of lives. And we're going full ESG and trying to make energy (and food) as expensive as possible. This is definitely a first and credit has to go to Western leaders because it really takes talent to self-destroy to this extent.
I think the question was, "How can I profit as things get worse?" Or, "What are good ways to protect myself as things go downhill?"
My recommendation? Reduce expenses. And think about investing in ways to reduce those expenses - Toilet paper is expensive, buying a bidet can save money after X uses. Meat can be expensive, see if a farmer in your area is willing to sell you the meat of a full cow at a discount for you to freeze and use over the course of X months.
Being temporarily underwater is fine, unless you think that economic growth will stop, or you are a day trader.
Dollar cost average if you can.
That's funny, I would recommend the exact opposite given the inflationary situation.
I would accelerate buying durable objects that you would like to have eventually, instead of waiting.
Saving money beyond a safety buffer is a bad idea when cash is losing 10% of its value per year and stocks are going down.
Not "to some", two back-to-back negative GDP stats has been the definition of a recession for my entire life. Now suddenly it's questionable, because the current administration would like to shrug away its failures, and too many in the media are helping them do it.
This ad-hoc re-definition of language to suit political purposes is scary and Orwellian.
> Now suddenly it's questionable, because the current administration would like to shrug away its failures, and too many in the media are helping them do it.
Whether or not I agree with the assessment of the current administration wanting to "shrug away its failures" has nothing to do with it. The parent comment was clearly arguing the theory, which is total bullshit on its face, that the reason it hasn't been officially designated a recession is because the administration doesn't want it to. The reason this theory is total bullshit is because it's pretty obvious the administration has no control over how the NBER marks recessions.
I think it's fair to designate theories which are total bullshit on their faces as "conspiracy theories".
This literally invented false historical facts (about the historical official definition of a recession) to support a claim of a political conspiracy (of the media doing Orwellian thought manipulation through language redefinition to support a favored political faction.)
There is quite a trend toward calling things conspiracy theories these days, but there are more conspiracy theories being spread these days.
I think is is probably due to the well-documented conspiracies between the conservative (and some of the radical liberal) press and foreign propagandists to spread misinformation in the US, and conspiracy theories are an effective way to achieve that goal.
If Trump was still president, the media would most definitely be calling this a recession. And they would be correct in doing so.
Because the other indicators they look at (employment, consumption etc.) have been consistent with recession in those cases. They've also called recessions without two consecutive down quarters (either with an up quarter in between, or most recently with a single down quarter), because the other indicators were strongly indicating recession. Right now jobs are up.
Employment is strong, consumption is strong, the 1Q drop (not sure about 2Q because I haven't seeb details yet) was associated with a jump in imports as consumer purchases of imported goods shot up.
Honestly, there's probably a problem with the entire concept of “recession” as a binary label, but the same multidimensional set of factors that has allowed multiple recessions to be determined without two consecutive down quarters supports non-recession with two consecutive down quarters.
No, it hasn't, and two of the last three NBER-identified recessions have not met that definition. It has always been multidimensional, it's just that historically the other factors have always [0] pointed toward recession with two down quarters, and sometimes also without. Having strong employment, etc., despite two down quarters in GDP is a historical aberration.
[0] EDIT: as another poster notes, not always—the 1947 non-recession being an example
But wait, according to the mainstream media now, we shouldn't listen to the NBER either, they're all just a bunch of "white economists":
https://www.cnn.com/2022/06/30/economy/recession-economists-...
Is this a joke? It's like something you'd overhear at brunch from a group of co-eds
How is more people working for less pay a counterargument against recession.?
https://fred.stlouisfed.org/graph/fredgraph.png?g=Sfun
So, that sucks, but it doesn't make a useful definition of recession. This is the result of massive, global macroeconomic forces. It's basically a slow reset of the post-WWII global order.
I mean, if we just take Wikipedia as a gauge, they have defined it according to the NBER, dating back to 2008 [1].
A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.
[1] https://www.nber.org/news/business-cycle-dating-committee-an...
[2] https://en.wikipedia.org/w/index.php?title=Recession&diff=pr...
[3] https://en.wikipedia.org/wiki/Talk:Recession
[4] https://twitter.com/RepublicanStudy/status/15516279756401909...
From the Oxford dictionary (recession): a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.
It's only now that we're seeing all this slimy lawyering about the definition of recession. "Well acksually, technically..."
"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." [1]
Planet Money (podcast on NPR) did an episode [2] a little while ago about it that I recommend listening to. They talk with one of the 8 economists. It was honestly refreshing hearing the economist talk about it, I got the impression that it was a more neutral take on the circumstances rather than pushing a narrative.
[1] https://www.nber.org/research/business-cycle-dating
[2] https://www.npr.org/2022/06/24/1107581150/recession-referees
And yes it much more complicated - especially it also depends on how much outside pressure NEBR has. I think there is a large pressure not to declare recession since we still have a high inflation and feds needs to continue raising rates.
https://www.nytimes.com/2022/07/12/opinion/employment-wages-...
When the employment outlook changes, and I expect it will, we will be in a traditional recession.
> significant decline in economic activity
What is "significant"?
> more than a few months
How long exactly?
All I gather from their description is that they basically just get a "feel" for it. That's why so many people choose to follow the two negative quarter thing - it's objective and clearly defined, but maybe less accurate (particularly in cases like now where unemployment is still really low).
It's helpful to think of economics as a field under the branch of political science, which itself isn't very scientific.
It would strike me more as "feeling it out", but they are not in a rush to announce it is or is not a recession until they have a better feel. Everyone seems to be rushing to call it a recession as early as possible. The economist I heard talking had a "wait and see" attitude on the podcast which was refreshing to hear.
"And it’s rare for there to be two consecutive quarters of negative GDP without a recession. In fact, George Washington University professor Tara Sinclair said the only time on record appears to have been 1947."
From: https://www.washingtonpost.com/politics/2022/07/25/biden-adm...
there are too many variables for a circumstance that doesn't happen very often for it to ever be the same
We need a whole new measurement. A quality of life index, which measures the real cost of living, not in dollars, but in number of hours required to earn the necessities of life: shelter, food, water, and by extension, the things required to get those: transportation (to and from work, avg distance), certification (aka education), and medical insurance.
There have been people in the past who noticed the cycle and came up with methods at stopping the cycle.
Best case is you catch the rock, and put it down gently so it doesn't break, but rock will go down.
Covid could have been prevented by mechanisms that Trump removed. The US inexplicably kept juicing the economy with zero interest rates through the end of Obama and all of Trump. 2008 could have been prevented by depression-era regulations that were removed due to heavy lobbying and traceable payments to (bipartisan) politicians. Whatever bubbles pop next (crypto seems likely to be one of them) will probably have been fueled by that same deregulation.
People inherently will try to put things to their benefit and to what incentives them. It takes a lot of structure to make the cost benefit of the incentives to outweigh the perceived benefits. It starts with something relatively good, but slightly pushed and snowballs from there. "I got stuff done that fed all these people! Surely making sure i get a little extra food is fair.....". Maybe someone notices and say "thats not fair", then why would the person go through a bunch of effort to make sure everyone is fed again and not just themselves? Altruism?
Every social structure ever created to stop this has failed in Human history, its reasonable to say every one that will ever get created will. They will be exposed to powerful forces of erosion and entropy. Maybe you can get a machine system that rules over humans that has different incentives or something, but any system that seeks to curb corruption will fall sooner or later. You can try to make in the system a desire to repair itself, but that in itself becomes an incentive and then we see purges.
You can build a tower to keep your rock up and defy gravity, but that tower WILL fall one day.
Can you prove that the business cycle is inevitable? Why would an analogy prove anything?
I also literally said that there have been methods used to stop the business cycle. And yes these methods have been successful at completely impeding it... but at great cost. It's called communism.
So literally I've proved the statement wrong by showing the existence of a counter example. The proof hints at the possibility that there are other systems besides capitalism or communism that are undiscovered or not created yet that could impede the business cycle without the associated cost. Others could say that communism as defined by the manifesto was never really implemented or that the current examples of communism failed for different reasons OTHER then communism.
Either way, the cycle being inevitable is categorically false.
Because conservative media is feeding people the talking point, and they are aren't really applying too much critical thought to the matter.
protip: everyone can perceive which ways the parties are different, when people refer to both sides they are referring to the ways they are the same, not the ways they are different
"We're not actually in a recession." So what?! Just acknowledge things aren't good and get to fixing them, be honest with the public and have some bloody integrity for once.
The US (and UK, and Australia, etc) partisan political playground fighting is ridiculous and the media (inc. social media) spends far too much time supporting it.
More people are working and can buy less. This is not a good thing.
Lets talk about what we can do to improve things.
The cost in trust is very high, and the gain so small.
This is like saying sure you can't buy as much bread, but at least you are working longer.
The fact that more people are working to produce less describes an economy in decline.
What am I missing here?
Bits about a “recession” come up around the 12-18min mark with relevant info beyond.
That said, I don’t know enough to map/equate these simple types of economic explanation with current actual state.
These people do have huge levers that control our lives that they can pull. Their actions do have massive effects on the American economy, and by extension the economy of the rest of the world. The actions they're taking are legitimately horrifying.
I seriously don't think these people understand what the lives of normal people are actually like. The white house had the gall to put out a tweet bragging that gas prices had come down, and that this could be saving people $35/mo, and how much that is helping.
Gas if still $4.2 national average per gallon. That's HUGE, and the direct actions of the administration are to blame for this.
We're not seeing a decline in employment or spending. The really bad symptoms of a bad economy aren't there yet.
> Gas if still $4.2 national average per gallon. That's HUGE, and the direct actions of the administration are to blame for this.
Which direct actions? And frankly, gasoline prices do not amount to a signficant amount of spending by American families. Food and housing costs are also up and wages down (adjusted for inflation) which account for a lot more money that people actually spend than energy. However gasoline prices are also way down from a month ago, yet food/rent are still up.
Gas affects the prices of nearly everything in the economy so I have no idea how you would conclude it's not a large portion of spending. I work in commodities and we are seeing massive price increases simply due to fuel & freight costs.
https://fred.stlouisfed.org/series/U6RATE
That doesn’t appear to be the cae
I’ve been hearing from some people that the rise in gas prices is this administration’s fault.
However, when I look at prices here in the EU, gas prices have risen much more. Is that the current US admin’s fault as well?
What specific tools should the exec use in this situation? EO no more oil exports? EO limiting the record petro industry profits?
What is the complete argument for why this is Biden’s fault?
https://www.reuters.com/business/energy/shell-reports-record...
"Shell (SHEL.L) posted record results on Thursday, with a $11.5 billion second-quarter profit smashing the mark it set only three months ago, lifted by strong gas trading and a tripling of refining profit. The company also announced a $6 billion share buyback programme for the current quarter but did not raise its dividend of 25 cents per share. It said shareholder returns would remain 'in excess of 30% of cash flow from operating activities'."
The subtext is: these companies are doing well, and that's a bad thing. How do you think that effects their desire to bring down costs for consumers?
And also: yeah, their profits are up, because due to the actions of the administration people are uncertain about their ability to buy this stuff in the future, and the futures cost goes up.
Watch the end of this clip: https://www.youtube.com/watch?v=0tOQ5AaFJdU
The question is: do you think this will accelerate us towards a a green energy future.
Her answer: yes, and that's a good thing for the following reasons.
BTW, a green energy future is one where these oil companies are out of business. The energy secretary is saying that she wants these companies to accelerate their own demise at a decreased profit, and how there eventual disappearance is a good thing.
Yeah, gas prices are up. No kidding.
it was a mistake to focus on attacking o&g when alternatives still aint ready yet.
Companies with heavy capital investment will see huge gains in % profit as their debt obligations are inflated away.
For better or worse, we don't live in anything resembling a command economy.
This is not a value judgment as to whether this is right or wrong.
Essentially correct. Presidents have very little control over this.
https://www.cnbc.com/2022/02/24/biden-administration-pausing...
We could drill our away out of this problem, but we are not, because the the biden administration is being held hostage by the progressive left. And before you start calling me a republican, im not one, but this is just a really stupid idea because it's decisions like this that will cause republicans to be elected in 2022 and 2024 - the american public isnt going to take higher gas prices for the team to fight climate change at this point, they are going to vote people into office that will lower them. biden doesnt realize this because he is surrounded by people that think a like and are too rich to be unaffected by inflation, or he doesnt care -- either way, it s a bad position
I personally don't think mandating all actors to altruistically abstain from transacting at market price would be a sound policy, but that seems to be what liberals want.
> The net profit margin of S&P 500 companies, which include energy giants such as Chevron and Exxon Mobil, in the first quarter has been running at 12.3% based on estimates and earnings reported so far, according to FactSet. That’s down from a peak of 13.1% in the second quarter of last year, but above the pre-COVID-19 level of about 11%.
As with food, they've realized the public will pay higher margins than they previously thought they could get away with.
Ding Ding Ding!
The relevant question is why isn't there competition to drive the market price down.
If it appears that there is a monopoly or oligopoly extracting value from it's market position, the solution is diversification, not profit controls.
Profit controls just drive prices higher as companies strive to inflate their COGs
Mastercard is already experimenting with CO2 emissions based spending habits: https://www.mastercard.us/en-us/vision/corp-responsibility/p...
I am the last one to believe in these types of things but it is getting to a point where I feel like we're being boiled like a frog.
Climate/ESG initiatives have lost respect in my eyes, I'd like to support sensible things but this is how we'll get totalitarianism on our hands. Then there is the whole WEF agenda.
The only thing I want to see out of Biden on gas prices is a windfall tax on oil companies where the funds are dedicated to lithium exploration.
Imagine you're a company which builds refining and extraction infrastructure. The government wants you to build more capacity to bring down the cost fuel, but 18 months ago. you watched them just straight up cancel a project which was already half finished.
Would you go for this? I wouldn't.
And you have a bunch of land lease contracts which allow you to extract oil. Without these contracts your business will collapse. The government has said that they won't give you any more until you use the ones you have. But again: they've spent the last 18 months cancelling projects, and talking about how we need to make a transition away from your business.
Do you trust that once you use up the remaining leases you have, that they're really going to give you more? I wouldn't trust that.
[1] https://www.whitehouse.gov/cea/written-materials/2022/07/21/...
Is this not the same thing as ‘alternate facts’?
Even just 15 years ago it was nowhere this overt or coordinated. The turning point seems to be shortly after JournoList and CabalList started when different independent media organizations began to collude to push a unified "narrative" rather than the truth.
up until literally 2 weeks ago the media was on about the "biden boom" (lmao)
They are basing it off facts. The NBER is the one who defines a recessions. They haven't done so (that I'm aware of) as of right now.
It might be that it will eventually be the case, but the arbitrator of this hasn't ruled on it.
Calling it a recession officially now would be the alternate fact.
Basically, it's like how someone can be guilty of something, but you still have to say "alleged" before referencing the crime.
Yes, you might have a million witnesses, but they aren't guilty until they are guilty.
And I'd much rather have a government that abides by these rules than not. Offhanded remarks based on willful disregard to order should not be encouraged.
https://www.politifact.com/factchecks/2022/jul/27/instagram-...
The fact the media on whole has decided it's ok to redefine a commonly accepted definition when the administration promotes it lends itself to the media being a mouthpiece for the administration.
I am willing to understand nuance and a changing definition, as I am sure there are parts of the economy people are learning to deal with. Gig workers, workers headed back from retirement and more. This doesn't even touch on the self fulfilling prophecy of hearing that the country is in a recession.
I am less willing to accept a change in a short timeframe and right before numbers are released.
“It’s not about what’s true, it’s what you can get people to believe.”
The news has for the most part has not called out Biden’s many missteps. Not even John Oliver is making fun of it.
Get used to it. We're back to the status quo (of incompetent media). In fact, it was the same for the previous admin, just in a different way.
The System doesn't like outsiders. If you haven't paid your dues, sucked up, kissed the ring, etc. then you're marginalized. Put another way, how would it look if someone with no experience was decently effective? Say about as effective as the current highly experienced (politician) that's POTUS?
I'm no fan of Don T, but given humam nature and The System, he was doomed to "fail" no matter what. As in, perception is reality (and most people now have a bias that isn't going to change).
Believing in the mainstream media is the adult equivalent of believing in Santa Claus.
For example: "Of course economists have a technical definition of recession, which is two consecutive quarters of negative growth."
-- The head of Biden's National Economic Council, in a past life, apparently.
You can find many other examples in the past of his advisors defining a recession as two quarters of negative GDP. And you can find many examples in the past of the press defining a recession as two quarters of negative growth.
"two negative quarters in a row is a standard indicator for an economic recession."
-- Washington Post, fact checking Donald Trump
What has changed?
The party in power.
its really hard to imagine how the fed assumed 'free money' was a sober policy to drive one of the worlds largest economies on. the best we can hope for now is the student and automotive credit bubbles dont burst under the strain of half-percentage-point increases, which i suspect will continue throughout 2023 as inflation crests 15%.
Next, pick a country and its inflation rate. The Euro? https://www.nytimes.com/2022/07/01/business/eurozone-inflati...
Pick another currency that meets the requirements of being a reserve currency and then look at its inflation rate.
I don’t understand all the details.
Personally, I think it would be great to understand the economy at a more basic level rather than what’s put out for the general public to consume in the often overly simplified terms.
For example, the condition of the economy vs the Fed raising rates will be interesting.
The Fed is trying to slow the economy but much of the inflation problem is supply side related.
Ever watch Fox Business? They talk politics all day long. I try to deal with it during commercial breaks but it can’t seem to stick to business.
Have you ever actually watched?
If you want cable news that isn’t complete D good R bad, or the reverse, CNBC is the way to go.