As some of you may have been hearing, we may or may not be in a recession. This comes after the White House announced that they didn't want to call the two consecutive losses in GDP a recession (Wall Stree Journal.) So what's the deal, are we in a recession or not? The official definition of a recession is "a significant decline in economic activity spread across the economy, lasting more than a few months” (NBER), and the three characteristics of a recession are high inflation, high-interest rates, and less buying power (fool.com). With COVID-19, the government had to respond in an emergency to ensure that it's citizens were able to survive the 3-6 months without being able to operate their businesses, shops and stores. Thus, there was a massive bailout. Because of that, spending has increased, bringing inflation up to 9.1% as reported this month. (Wall Street Journal) According to the Bureau of Economic Analysis, we have had two consecutive losses in the nation's GDP, meaning that we are officially in a recession. We've increased the interest rates by 2.5%, meaning home values are being brought down. (CNBC) Even though there are political parties that are downplaying the fact of the recession, every indication points towards it.
References:
Goodkind, N., & Yellin, T. (2022, July 29). So are we in a recession, or not? CNN. Retrieved July 29, 2022, from https://www.cnn.com/2022/07/29/economy/gdp-recession-fed/index.html
Gross domestic product. Gross Domestic Product | U.S. Bureau of Economic Analysis (BEA). (n.d.). Retrieved July 29, 2022, from https://www.bea.gov/data/gdp/gross-domestic-product
Loe, M. (2022, July 28). Yes, there is an official definition of a recession. weareiowa.com. Retrieved July 29, 2022, from https://www.weareiowa.com/article/news/verify/what-is-a-recession-official-definition/536-47a3cc51-3385-4f43-8fbd-1456c01536df
The Wall Street Journal. (2022, July 28). The White House says it's not a recession - opinion: Potomac Watch - WSJ Podcasts. The Wall Street Journal. Retrieved July 29, 2022, from https://www.wsj.com/podcasts/opinion-potomac-watch/the-white-house-says-it-not-a-recession/d4a14e04-a084-4b8d-b347-b4238b5fb3f8
What is a recession?: The ascent by motley fool. The Motley Fool. (2022, March 29). Retrieved July 29, 2022, from https://www.fool.com/the-ascent/personal-finance/what-is-a-recession/
Hi Svyarom,
I have heard a lot of discussion on this topic, and there is an aspect of it that slightly confuses me. I find it strange that people will vehemently argue that we are not in a recession. I understand that we will not know we have entered into a recession until after the fact, but there are observable issues with the state of our economy that seem to make the point of arguing we are not in a recession inconsequential. It is as if by saying we are not in a recession, people are trying to say our economy is doing fine. However, when you see stats such as American households have lost 6 trillion dollars in three months (Zeisloft, 2022), it seems to make the argument that we are not in a recession seem silly.
Thanks you for your insight!
Reference
Zeisloft, Ben. (2022, September 9). American Households Lost $6 Trillion In Three Months.
Daily Wire. Retrieved from: https://www.dailywire.com/news/american-households-lost-6-trillion-in-three-months