The “two negative quarters” myth

As I get older, I become increasingly frustrated to retreat against the myths that are so widely held over and over again. One of the myths is that a recession occurs when there are two consecutive negative quarters for real GDP growth. That’s not how the NBER determines recession. (An obvious example is 2001, which saw a recession but did not see two consecutive negative quarters.)

Some people are now making a big deal out of this fact Atlanta Fed GDP tracker It is currently forecasting a negative 2.1% real GDP growth rate in the second quarter. (Negative 1.6% growth followed in the first quarter.) Even if that forecast ends, it doesn’t mean that the U.S. economy was in recession in the first half of 2022 – an unreasonable claim – but rather that it suggests a six-month change in the RGDP business cycle. Not a reliable indicator.

By early 2022 the economy was not only in recession, it was experiencing the most heated boom in many decades. Consider that wage employment increased by about 2.5 million in the first 5 months of 2022, which is almost three times the normal rate of growth. This is one of the fastest growing jobs we’ve ever seen. And company Even then there was a shortage of workers.

It goes without saying that the US economy is not currently entering recession. Probably a factor as to why they’re doing so poorly. It is even possible that the recession started a month ago. But the U.S. economy was certainly not in recession last winter.

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