Yes, the U.S. economy is likely in recession

Exactly this, hit the nail on the head. If anyone thinks this isn't all happening because US mid-terms are coming up, they are delusional or lying to themselves.

Forgive my ignorance here, but isn't it simply better for the economy to have low rather than high unemployment? And since a recession is basically "the economy is doing bad" doesn't that mean that the unemployment argument is: "it may be doing bad, but not /that/ bad". And then the discussion is if the economy is doing bad enough to call it a recession, people point to low unemployment and say: no.

The unemployment rate is a good proxy for a person's ability to get a better job, and that is an undeniable good. Restaurants are having trouble hiring people because most of those jobs are awful. Employers who treat their employees well aren't having retention problems.

> If the economy really tanks and commercial real estate becomes worthless as projected, there's going to be so much entrepreneurship

Entrepreneurship always ramps up during the hard times. People lose their jobs and are forced to get scrappy.

> High prices open the door to competition. Anyone can mix a cocktail for less than $13.

Consumers became desensitized to price increases during the pandemic supply shortages. Right now, there's strong evidence to suggest that many businesses are simply raising prices because they can get away with it. If you're running a business, you have a once in a lifetime opportunity to jack up prices without harming your brand - you can just shrug and blame the abstract specter of "inflation" and your customer base directs their frustration toward some political entity instead of you.

In the short-term it's a no-brainer; especially when everyone around you is doing it. But in the medium-to-long-term, you're 100% correct that it leave you vulnerable to being undercut by new entrants to the market.

For me, the argument about the technicalities of what makes a recession bothers me much, much less than the smugness of a general group of the intelligentsia who once conveniently anointed themselves "fact-checkers" that are trying to handwave away the idea of a recession in spite of historical definitions that we've never strayed away from.

We really ought to resist bulls*t like this. One can simultaneously believe that people should get vaccinated, that Trump is an embarrassment of a person and leader, that news has stopped being news for at least 15 years, and that the "but actually it's not a recession because.." elite of this country don't care about truth but, instead, power.

GDP is also a lagging indicator.

Recessions happen fast. There's never been any "I think" in all the recessions I've experienced. Everyone knew.

The Fed was basically announcing that they're going to cause a recession that everyone will agree on in order to get inflation down.

They've largely shut up talking in the press which has allowed the markets to rebound a bit (which will allow the rich to unwind some positions).

But the problem with inflation that we're seeing right now is that it goes beyond just an increase in oil prices, the leveling off of oil prices will not be enough to get it under control, and the Fed's stated goal of 2% inflation targets will require rising unemployment. And the Fed basically told everyone that this is what needed to happen when they were talking about focusing on core CPI instead of just oil, and talking about holding interest rates above the natural rate for some time, along with their statements that the labor market remains historically strong.

I can't quite predict when that will happen, but we're certainly not there yet.

We should also see the entire rest of the real economy get stress tested, and you can easily bet that since the last time it was tested was 2008 we'll see detonations in something else. My bet is commercial real estate goes off first due to the combined effects of the pandemic, remote work, and the recession.

There's still a lot of "work" left to be done to get into a recession. The yield curve needs to invert for a sustained amount of time, unemployment should spike and I expect it hits around 8%[*], the Fed will realize they've gone too far and start slashing rates again. We'll be talking about bailing out rich people again.

Whatever you think about how bad this is, the actual recession is going to be 10 times worse, and most of the arguments about how horrible the current economic conditions are I think can be summed up as "tell me you were too young to really remember how bad 2008 was without telling me". And this time could very well be worse than 2008. We've had even longer to build up problems in the economy (and we did basically fuck-all about regulating the banks last time) along with the fact that if the Republicans take the House they'll likely be happy to ruin the economy to hang it on Biden (probably up until the Billionaire class starts to actually hurt and yells at enough of them to knock it off).

Right now it looks like we're heading for a second half recovery in sentiment though and I don't really expect any of this to unfold until next year after higher interest rates have had time to take effect. Although towards the end of this year Wall St may start to realize that core CPI isn't coming down even though oil levels off and that interest rates will still go up, and they'll start to more accurately predict how much pain we're in for. Right now it seems like the prevailing sentiment is that the Fed has largely done their job, rates won't go up much longer and that inflation is tamed because oil leveled off, so we just had the weakest recession possible which tamed all our inflation and its back to boom times--I am extraordinarily skeptical of that take.

[*] at a minimum

This is very likely his personal opinion from the looks of it.

I think is just providing some basic information and providing his opinion. For example, he clarifies that the NBER waits on average 7 months to declare a recession,and is essentially a retrospective assessment. However, it has never failed to declare a recession after two quarters GDP loss since WWII

> FRED chart, to give perspective that the real GDP dip is very slight

Looking at it, except for 2008 it seems that the dip is mild (for example the 1970's oil crisis have a very mild slope).

In this title I feel like the word "likely" is a bit inappropriate and "probably" would make more sense. "Likely" implies a bit more.. probabilistic reasoning, whereas gauging a recession is more a question of how you define it. But here, I guess, it's just being used as a slightly more professional way to say "probably", and should be taken to mean exactly the same thing in this case.

If something is "likely", I would assume it's more likely than not.

Yes, this usage is basically "wahrscheinlich". Here it is a rhetorical device to soften the author's conclusion:

> The bottom line is that, with the announcement on July 28 of a two-quarter GDP decline, we can be highly confident that the U.S. economy entered a recession early in 2022.

This will usually be the case. When something is likely X it is probably X, not possibly X.

There is another possibility: stating something as a fact could have legal implications (especially if it isn't "true"), but stating an opinion is often fine. So, I would read this as "Our opinion is the U.S. economy is in a recession (not a fact)", despite the article trying to convince you. It even finishes off with

> "we can be highly confident that the U.S. economy entered a recession early in 2022."

which is stronger than "likely", but still shy of saying that it is so.

> I don't know why we focus so much on interest rates

It directly effects the supply of money which is a direct lever on the economy.

We have a money-based economy. Not in the same sense as oil-based, but a lot of economic activity takes place because someone borrows money, uses it to buy something big, and then repays the lender over time. This is true of homes and renovations. This is true of college degrees. This is true of many automobiles and major appliances. This is true of major government infrastructure projects. This is not directly true of factories and shipping companies and and startups, but even these compete for their funding with everything else that seeks funding.

The price of money up front is a big deal.

Inflation predated the oil crunch, but certainly the oil crunch exacerbated the problem. In general, economists probably understand the economy better than we do, so it's probably foolish to write them off in favor of some simplistic understanding of the economy.

Recession has always had a very specific and widely accepted definition in the financial academia - referenced in literally hundreds of academic papers. In my 25 years in finance, I've never even heard anyone debate the definition of recession. Even today, in finance and despite all the Twitter drama, no one I know in the field debates that we're in a recession.

The only debate is on social media with some spillover into low quality media.

I listen to the experts when it comes to climate change, vaccines, evolution, the curvature of the Earth... but somehow when it comes to finance, no one on social media wants to listen to the experts in the field.

Nobel prizes, lifetimes of academia, respected leaders in the field - they all must be liars because some Twitter personality and a Wikipedia mob tell me different.

We need better reputation systems.

Or more accurately: we should blame the global pandemic and subsequent economic insanity, which isn't "the other guy" and also probably explains it better than anything else.

That's the traditional definition. When your friends get laid off, it's a recession. When you get laid off, it's a depression.

That’s a 14% drop.

Do we have a reason to believe this is a recovery versus a “dead cat bounce” caused by market irrationality and hope?

- - - - -

As an aside, you should list specifically what index you’re referencing as “the market”, so other people can check the numbers themselves.

> I'm eager awaiting the next Tweet that include #trust_the_economists

That's funny.

With Krugman leading this august group, no doubt.

You think political/economic debates always have to be productive? :)

Yeah it's a rather academic point. I guess some people like to actively rotate their portfolios as if their concerns about recession aren't already priced in. Otherwise you can make broad assumptions about what kind of job opportunities may exist over the next two years, how your company might do in a recession, etc and position yourself a little better. Perhaps it's not the right time to go for a risky consumer-facing startup, stuff like that.

For my part seeing all the supply shocks, and the fact that the Fed might pivot to combat a serious recession, caused me to a sign a two year lease to lock-in a lower rate, as I believe we're not done with inflation yet.

> Won't they just say it was the previous administrations fault anyway

Given the timescale for large economic changes (excluding something like a covid shock), it's almost always the prior admins fault - both good and bad.

The charitable interpretation is people want the president to do something about it, and he first must admit it exists.

Imagine the frustration if your house were on fire and the fireman is telling you that nothing is wrong.

On a technical level yes. Recessions are almost always at least the previous admins fault, often times the last two or three admins fault. (Or sometimes it’s the fault of no administration at all. You can argue that Covid+Russian war were just outside factors to the US that would have left us in a recession even with ideal handleing)

Politically it matters because, generaly speaking, people will blame the current admin anyway and vote against them for us being in a recession.

> I guess I’ll take it over “her emails” and “his latest tweet”

It’s not as cringe inducing but considerably worse in other respects. Wikipedia didn’t take sides in the definition of email or tweeting to benefit one party in those previous elections.

“a significant episode during which economic output falls”

There's a difference between rooting for the country to do worse and acknowledging that it is doing worse, and we shouldn't shy away from the latter out of frustration with the former.

And real wages fell 3% in six months [1] (i.e. over the first half of this year, wages fell at a 6% annual rate), so I think it's time to acknowledge that the nation is doing worse, at least for the working class.

1: https://www.statista.com/statistics/216259/monthly-real-aver...

Amen. Now we just need to take the next logical step into balkanization and we can start making real progress. I have no right voting for federal candidates in my midwest region that can influence legislation that impacts new york, and vice versa.

Regionality > Nationality

tl;dr america is geographically too big and it's really starting to show.

Fair point- but how much of that is due to media do you think? Media has spent last 5 years creating false narratives just because they don’t like the orange guy is that it has built up pretty much disdain in half of the country. I still remember NYT calling for recession when Trump got elected. I think the root cause of this problem is not those 60% or whatever then number is on the other side, it’s lack of objective and trustworthy institutions like media.

> 60% of people are actively rooting for their country to do worse whenever their guy is not in charge.

What are you basing this statement on? No way is it 60%, more like 6% of the population, but perhaps 0.6%! Whatever it is the voices you hear are a tiny slither of the population skewed to the most disagreeable and combative end of the personality spectrum. So, unless you’ve done some world class polling to determine the answer to that then I’d suggest gaining more perspective.

This means, assuming a roughly even split, only 30% of the country is actively rooting for their country to do worse at any given time. If a 30% negative outlook "prevents you from building anything" maybe your system is bad.

It's not just imaginary, though. There are very different visions of how the country should work that can't exist simultaneously. If the culture wars were just a fabrication of the media, that would be easier to solve than what's happening now.

Wanting the administration to admit it a recession is different than rooting for a recession.

If your house were on fire, you would want the public authorities to acknowledge the fact. This is not rooting for the fire

I always want the country to do better, but it depends on what you mean by "better". Your local school's funding was cut in half, but the average family owes $2,000 less in taxes in an area with already low incomes. Is that "better"?

Gas goes down to $2 a gallon. You probably pay less to commute to work or pull your boat. But your kids (and these days, you) might face crippling droughts and heat waves as an indirect consequence. Is that "better"?

I can understand differing views.

https://www.thisamericanlife.org/776/i-work-better-on-deadli...

60 v 40? Nah. It's closer to 5% v 5% with the 90% in between the extremes just looking to live a semi-happy and uneventful life (i.e., they can pay their bills, love their family, etc.)

The politicians and the media (i.e., the 10%) continue to live in a bubble. They have a very biased and incestuous lens. It's groupthink taken to an extreme.

Just look at the news yesterday. Pelosi crossed a line in the sand and visits Taiwan. Given all the other things on our collective plate, how was adding more to that pile (of sh*t?) a good use of her time and energy? And taxpayer resources? Who in the 90% wants more on the pile? And who in the 10% is willing to say, "Nancy! You're only showing how out of touch you are with the 90%."

I'm not suggesting Taiwan be cut loose. Not at all. Only that the sense of priorities is dumbfounding. But perhaps, rather than talk about the economy (and the 90%'s perceptions and fears) it makes better political and media sense to have news of Nancy in Taiwan?

Put another way, it's not the 90% putting the screws to the stability of the democracy. We don't have enough power in hand to do that.

> The United States of America has become a place where 60% of people are actively rooting for their country to do worse whenever their guy is not in charge.

If so, I blame the media for constantly selling their narratives and inciting hatred. Any disagreement is labeled as far this and far that. If a politician makes a move that does not fit a side's narrative, the media will attack the politician's motives and assume the worst. When the SCOTUS make a ruling that the media disagrees with, it must be that the SCOTUS are the worst human beings in the world and they have the most sinister motives. The list can go on.

I'd also blame the education system of the US. We are supposed to educate kids to take different views, to seek information instead of merely opinions, to be aware of logical fallacies, especially the damaging ones like attacking one's motive. Yet someone we get generations of angrier and angrier kids.

If you denied it you'd have a banner in your post explaining that there is in fact a recession, and you'd be stripped of your ability to speak with your friends on {{ .platform }} until you removed your opinion.

Way higher capacity for underemployment with the "gig economy", which was less prevalent in previous recessions.

Low wages, high inflation, general financialization of everything resulting in more people working or working multiple jobs to keep their heads above water.

Much less expendable income means economic contraction.

Stagflation?

From the article:

"Another argument, offered by U.S. Secretary of the Treasury Janet Yellen, is that the strong U.S. labor market precludes the NBER from designating the current downturn as a recession. But while it is true that employment is one of the data series that the NBER consults, there is no reason to think that this variable — even if it remains strong — will single-handedly determine the ultimate call of a recession. Although employment usually falls during a recession, there have been several cases when payroll employment grew or remained roughly stable well after the start of an NBER-designated recession: from December 2007 to March 2008; January to April 1980; November 1973 to October 1974; and December 1969 to April 1970."

Although unemployment[0] is back to the pre-pandemic low, the employment-population ratio[1] is still below pre-pandemic levels. People just don't want to work. Probably partially due to the same factors that gave way to /r/antiwork's and /r/workreform's explosions of popularity. I'm sure other factors like people moving in with their parents/friends during the lockdown and the stimulus checks are also contributing.

[0] https://fred.stlouisfed.org/series/UNRATE

[1] https://fred.stlouisfed.org/series/EMRATIO

Their strategy worked for COVID[1], why wouldn’t they keep doing it?

[1] — denying inconvenient facts, redefining terms, and using social media to censor/propagandize. Now Facebook is “fact checking” economists.

https://www.foxnews.com/media/economist-slams-facebook-absol...

>"In the end, the Party would announce that two and two made five, and you would have to believe it. It was inevitable that they should make that claim sooner or later: the logic of their position demanded it. Not merely the validity of experience, but the very existence of external reality, was tacitly denied by their philosophy. The heresy of heresies was common sense. And what was terrifying was not that they would kill you for thinking otherwise, but that they might be right. For, after all, how do we know that two and two make four? Or that the force of gravity works? Or that the past is unchangeable? If both the past and the external world exist only in the mind, and if the mind itself is controllable—what then?"

- Nineteen Eighty-Four

Except that’s never been the definition. For decades the definition has always been “whatever NBER says.”

Two quarters of negative growth is a convenient shorthand because NBER takes their time declaring a recession, and it is generally true

Several recent recessions don’t match the two quarters of negative growth rule.

Because it's not the definition. In university long ago, we were told that 2 quarters of decreased growth was not a sufficient criterion for recession in the US. So when I keep seeing people complain about Biden's administration "changing the definition", I can conclude that they either have no clue what they're talking about, or they're just lying. In most cases, it's probably the former.

The definition of recession that invloves more than two quarters of reduced growth has been around for a long time. The idea that it hasn't is what was really made up for political purposes.

It's not the definition. If you have 2 quarters of negative growth, but everything else is good... what's the point of even calling it a recession? It loses it's value as a word.

2008 was clearly a recession, people felt it. Everybody seems to be doing fine right now as a collective. Very few people have lost jobs so far, as seen in the unemployment numbers. Just some overpaid tech

Guessing this is sarcasm, yet it's not clear to me what the joke is. That the ruling party will always deny there's a recession near an election?