IMO its not a real recession until you start seeing unemployment over 6-7%. The current "recession" is merely an artifact of us printing less money and raising interest rates, not a true contraction of the economy.
I agree on unemployment. If the economy recovers from here and employment stays low I don’t think the NBER will look back on the first half of 2022 and call it a recession. However, if unemployment starts to rise and we have further weakness then they are likely to call Q1 the start of the recession. It’s a tricky game and the story will only be told in hindsight.
This is an excellent explanation of the dreaded GDP/recession obsession that keeps the talking heads on TV occupied. I was listening to an NPR Planet Money podcast where an ex-NBER analyst was on and he went as far as saying that it could be several years after a recession that it would be declared a recession. The reason being that it is not within their remit to provide time-sensitive info.
And as you elude to, with unemployment (in the US) a such a low level (statistically zero), how could you "declare" a recession?
I'm definitely in the camp that if it feels like a recession, then it is a recession!
To further your great points, calling the whole economy one thing or the other doesn’t capture the underlying complexity of people’s own personal unique situations! Right now there are a lot of people hurting financially, especially with the burden of rising prices : (
IMO its not a real recession until you start seeing unemployment over 6-7%. The current "recession" is merely an artifact of us printing less money and raising interest rates, not a true contraction of the economy.
I agree on unemployment. If the economy recovers from here and employment stays low I don’t think the NBER will look back on the first half of 2022 and call it a recession. However, if unemployment starts to rise and we have further weakness then they are likely to call Q1 the start of the recession. It’s a tricky game and the story will only be told in hindsight.
This is an excellent explanation of the dreaded GDP/recession obsession that keeps the talking heads on TV occupied. I was listening to an NPR Planet Money podcast where an ex-NBER analyst was on and he went as far as saying that it could be several years after a recession that it would be declared a recession. The reason being that it is not within their remit to provide time-sensitive info.
And as you elude to, with unemployment (in the US) a such a low level (statistically zero), how could you "declare" a recession?
I'm definitely in the camp that if it feels like a recession, then it is a recession!
To further your great points, calling the whole economy one thing or the other doesn’t capture the underlying complexity of people’s own personal unique situations! Right now there are a lot of people hurting financially, especially with the burden of rising prices : (