the US economy is not growing ... yay!
If I truly believe in what I write in my journals: that I think we should reduce our global economic activity by roughly 80%, and then share the resulting output more fairly around the world, such that each person receives about $2,200 per year,
Then I should cheer when US GDP shrinks for two quarters in a row, as it just did.
I should cheer more loudly, the more US GDP shrinks! We've got a lot more shrinking to go!
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Now in the US we're going to have a political squabble between Democrats and Republicans and various economists over whether we're in a "recession" or not. The Biden administration, already expecting that these latest numbers would turn negative, had already sent out speakers from President Biden himself on down, including his Treasury Secretary, his Council of Economic Advisers, and so forth, to argue that we're not in a recession, that two successive quarters of shrinking output do not mean we're in a recession, that the labor market is still strong, that consumer demand is still strong, that gas prices are on their way back down, etc.
Republicans will say, "We've had two quarters in a row of shrinking GDP, we're in a Biden Recession."
So are we in a recession or not?
According to Gallup, 85% of US residents say the economy is getting worse, and 54% say the economy is poor. Overall, we laypersons rate the US economy as the worst since February 2009, during the depths of the Great Recession.
So according to the actual people living inside the US economy, yes, we're in a recession.
A lot of economists have used "two quarters in a row of declining GDP" as a shorthand definition for recession. But other economists look to a wider variety of variables, including payrolls, unemployment, retail sales, and so forth. The most unmistakeable sign of a recession is when unemployment is rising sharply and the number of payrolls is shrinking.
Do I, Bug, amateur observer of statistics, think the US is in a recession? I'd say not yet. Because I think the main reason for the decline in GDP is rising imports, not a general decline in economic activity. We've been substituting imports for stuff we were making in the US, because we have lots of dollars and the USD is strong compared to other major currencies. But I do think the economy is going to get worse before it gets better. There's usually a point in the business cycle when there's a general panic of sorts, with everybody pulling back on their spending and hiring at the same time, because everybody else is pulling back on their spending and hiring at the same time. We're not to that point yet. But if the Federal Reserve keeps hiking interest rates, we'll probably hit that point within the next 15 months, plus or minus 6 months.
I don't think a recession is baked in yet, but I think we're heading toward one. But who am I to tell the American people that they're wrong -- they think the economy is getting worse and that it is poor.
Then I should cheer when US GDP shrinks for two quarters in a row, as it just did.
I should cheer more loudly, the more US GDP shrinks! We've got a lot more shrinking to go!
-----
Now in the US we're going to have a political squabble between Democrats and Republicans and various economists over whether we're in a "recession" or not. The Biden administration, already expecting that these latest numbers would turn negative, had already sent out speakers from President Biden himself on down, including his Treasury Secretary, his Council of Economic Advisers, and so forth, to argue that we're not in a recession, that two successive quarters of shrinking output do not mean we're in a recession, that the labor market is still strong, that consumer demand is still strong, that gas prices are on their way back down, etc.
Republicans will say, "We've had two quarters in a row of shrinking GDP, we're in a Biden Recession."
So are we in a recession or not?
According to Gallup, 85% of US residents say the economy is getting worse, and 54% say the economy is poor. Overall, we laypersons rate the US economy as the worst since February 2009, during the depths of the Great Recession.
So according to the actual people living inside the US economy, yes, we're in a recession.
A lot of economists have used "two quarters in a row of declining GDP" as a shorthand definition for recession. But other economists look to a wider variety of variables, including payrolls, unemployment, retail sales, and so forth. The most unmistakeable sign of a recession is when unemployment is rising sharply and the number of payrolls is shrinking.
Do I, Bug, amateur observer of statistics, think the US is in a recession? I'd say not yet. Because I think the main reason for the decline in GDP is rising imports, not a general decline in economic activity. We've been substituting imports for stuff we were making in the US, because we have lots of dollars and the USD is strong compared to other major currencies. But I do think the economy is going to get worse before it gets better. There's usually a point in the business cycle when there's a general panic of sorts, with everybody pulling back on their spending and hiring at the same time, because everybody else is pulling back on their spending and hiring at the same time. We're not to that point yet. But if the Federal Reserve keeps hiking interest rates, we'll probably hit that point within the next 15 months, plus or minus 6 months.
I don't think a recession is baked in yet, but I think we're heading toward one. But who am I to tell the American people that they're wrong -- they think the economy is getting worse and that it is poor.