Is America 'Technically' in a recession?

Question

State facts only please

Answer 1

Ask 5 economists and get 5 answers.  There's hardly objectivity considering it is a subjective term.

Google "define:recession" and the most common "technical" answer is "two quarters of real GDP decline."  By the US Government's standard, we are not in a recession.

GDP is measured by the BEA.  As I understand it, the BEA uses the BLS' inflation figures to estimate "real GDP" from their GDP numbers.  Here are unadjusted GDP numbers followed by the BEA's "real GDP" numbers:

2007q3 13,970.5 11,658.9

2007q4 14,074.2 11,675.7

2008q1 14,201.1 11,703.6

Nominal dollars (current dollars) we saw a half year total GDP growth of 3.3 percent. I calculated it this way: (14,201.1 / 13,970.5) ^ 2 - 1.

So if inflation was under 3.0 percent per annum for 2007 q3 to 2007 q4, and inflation was under 3.6 percent per annum for 2007 q4 to 2008 q1, and assuming these definitions, we were not in a recession.  It looks like the BEA is using "core inflation" which excludes fuel and food to get their "real GDP" numbers and say we're experiencing "slow growth."

If you listen to the government, we are not in a recession.

If you use other private sources that use the older CPI methods to estimate inflation, we are in a recession.  Inflation is really more like 9-12% per year for the last few quarters.  Check out John William's Shadow Stats in my source list for inflation numbers.

Using solely GDP may be a bad idea anyway, because it measures how much money is moving around.  It sure is an important figure, but unemployment is also on the rise, among other things.

Technically, according to the government, no we're not in a recession.  As Peter Schiff said, if the government says it's sunny and I look out the window and it's raining, I'm bringing my umbrella.

Answer 2

A recession is technically defined as two consecutive quarters of negative GDP. We have not had even one yet, so the answer is no.