I personally think we're in recession and the reason is datapoints outside of this GDP print, what companies are saying, and the fact I know people that have been laid off already. What I find pathetic is that saying we are in a recession is now a political stance.
I think we all know that if a Republican were President the entire narrative would shift, with most of the press saying we're in recession while Fox, etc would say unemployment is still low which is what matters.
How did we get to a point where actual data can be outright denied or absorbed based on your political viewpoint? It's really pathetic. People will go to the ends of the earth just to protect politicians. Worse, even if we're in recession it's pretty mild, so I don't even know why there is so much handwringing about it.
>How did we get to a point where actual data can be outright denied or absorbed based on your political viewpoint?
Because the actual data is sending mixed signals. People equate recessions with job losses, but job growth is still high and unemployment remains incredibly low. Businesses equate recessions with reduced demand for goods and and services, yet demand remains strong enough to push prices and profits to record levels.
GDP has long been criticized for being a poor metric for the economy. But it's always been correlated enough with overall economic sentiment that it was Good Enough. It looks like we've finally gotten ourselves into a situation where the edge case issues with GDP surface.
Lastly, not everyone feels recessions the same. I was one of those people who benefited from the financial crisis, because I kept my job and lived in an apartment, so my income was going up while my costs went down. That doesn't take away from the devastation it caused to other people.
Descriptions of economic conditions are obviously politicized. This was probably always true to an extent, but it really took off during the early Obama years.
That said... my wealth manager has been and still is waffling when I ask him if we are in a recession. It's NOT just political; I don't even know my wealth manager's politics and I have absolutely no doubt he puts fiduciary responsibilities first and makes fact-based assessments.
Unemployment is low and the trend is mostly flat. Housing is doing fine. Consumer balance sheets are strong. Are we entering a recession? I think so. But there are a lot of "but"s which really do impact how smart and impartial people are thinking about where and how to deploy capital.
When I ask my wealth manager "are we in a recession?", he basically says "We might be in a recession. We might not be in a recession. Either way, we should not invest as if this is a typical recession."
I've seen the word recession thrown around plenty in the press; who's avoiding saying it?
As pointed out by another commenter the NBER has never failed to declare a recession after two consecutive quarters of GDP reduction. This is a preliminary report, I would expect them to wait for the full report to actually declare it.
These things work a certain way. Whether that way is good or bad isn't relevant to this particular point, by expecting that way to change on a whim you're just being impatient.
Because for better or worse, while some other countries have purely formulaic recession criteria, the US doesn't. This can swing either way - the US never experienced two consecutive quarters of negative real GDP growth during the 2001 recession, for example. No one is denying that real GDP has shrunk for two consecutive quarters, they're just correctly pointing out that that's not how the US government defines a recession.
My impression is that layoffs have been mostly isolated to tech at this point. I do know a couple of recruiters (outside of tech) who've been laid off lately, so that could be the canary. But my impression is that all of the quantitative labor market indicators we have are still strong - likely stronger than we've ever seen in a recession.
That's why it is important to have some verifiable agreed upon definitions. "Two quarters of negative growth" is something that anybody can understand and validate. Too simplistic? OK, make it more complex formula, whatever - but make it a formula, and make it fixed, so people can be sure neither Rs nor Ds can game it (at least not easily).
Instead what we're getting is "holistic criteria" which means pundits can argue on TV for hours (which they probably love to) and everybody gets to keep their partisan views and there's no objective meaning to any terms anymore. No wonder people have low confidence in "experts" and grasp at whatever they find on the internet to find some clarity.
> What I find pathetic is that saying we are in a recession is now a political stance.
This is such a weird information play. Recessions are defined after the fact by NBER. Always have. Always will be. There’s no set criteria.
Informally people cite the two quarters rule, but 2/5 past recessions (2000 and 2020) don’t follow that rule.
No one wants to communicate that nuance so we get mass confusion.
Sad to see that confusion even exists in HN.
What’s actually concerning to me is exactly that: every nuanced discussion in politics is now some gotcha where a reporter asks “yes or no” to a question that has a detailed answer.
I think most of the recession talk is trying to drum up fears of 2007-2009. If we are in a recession, it's a pretty mild one. But that won't stop people from pretending that the sky is falling in order to motivate voters.
The average american does not know the technical definition of what a recession is. They just know recessions are bad. Whether or not it's acknowledged we're officially in a recession can itself have negative economic impacts due to panic.
Also, Powell himself has been iffy about whether or not we're in a recession
> How did we get to a point where actual data can be outright denied or absorbed based on your political viewpoint? It's really pathetic. People will go to the ends of the earth just to protect politicians. Worse, even if we're in recession it's pretty mild, so I don't even know why there is so much handwringing about it.
That's because all politicians are liars and the media spin doctors will ensure that their lies gaslight the general public into believing them. The problem is, they can't deny the numbers and they know it, hence why they are beginning to change definitions.
Given the last administration brought the US into a recession 2 years ago with the same opposition, media and critics screaming at them, there is no more denying that this is a recession with these figures. The difference is, the current administration is trying to escape by changing definitions, which doesn't give much confidence in them and indicates that it may get even worse.
Now you see the same ones down-playing the inflation fears in November 2021 are trying to down play this recession very poorly with lots of damage control to save themselves and their careers. In reality we were no better off, and it looks like this is worse than the last administration.
And finally, the indicators for this with surging inflation was there since November 2021. Instead we have 'Stock market up 1% today on both this news and decades-high inflation.' [0] and later 'We are most certainly not in a recession.' [1]. Not only you have to look at it in the long term - not in 1 day, but you also don't wait for the figures to come out for you to then prepare for the worst. By then it is too late.
Hasn't the economy always been part of a political stance? The economy is one of the top 2/3 factors that people consider when voting, hence being important for re-election. It would be in the best interest of anyone trying to run for election to strategically paint a good/bad picture of the economy. This has been the case probably going back to the 1930s if I were to guess.
> How did we get to a point where actual data can be outright denied or absorbed based on your political viewpoint?
Our elites—I don’t mean that pejoratively, but descriptively—used to adhere to institutional values. When I joined a prominent NYC law firm 10 years ago nobody commented on the fact that it was named after someone who argued the pro-segregation other side of Brown v. Board. The institution, not only of the firm but the legal process itself-where even segregationists are entitled to their day in court—was a credo that transcended individual politics or individual notions of “justice” or “human rights.”
That flipped sometime in the last decade. Our institutions have been overtaken my millenarianism: https://en.wikipedia.org/wiki/Millenarianism. It’s a belief system that transcends institutional values—in the law, the media, everywhere.
Do you remember “The Resistance?” Where Clinton-supporting government employees pledged to work within the bureaucracy to defeat the agenda of the duly elected President—their boss? The craziness we’ve been seeing from conservatives lately is a reaction to that total abandonment of institutional values.
> Worse, even if we're in recession it's pretty mild, so I don't even know why there is so much handwringing about it.
Ideologies tend to deal in binaries. We are either in a recession and the sky is about to fall or everything is great. Jobless recoveries or full employment recessions don't fit into binary narratives.
I like to believe that there is a bigger picture here. Oversimplification: An economic downturn when there is a rise in nationalist sentiment had given birth to people like hitler.
Maybe if the majority perceives that everything is fine, when it isn’t, might help prevent that?
> Real gross domestic product (GDP) decreased at an annual rate of 0.9 percent in the second quarter of 2022 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 1.6 percent.
That makes two back-to-back quarters of real GDP contraction. To some, this is a recession, but it's the NBER that puts the stamp on it. AFAIK, NBER has never failed to put the recession stamp on back-to-back drops in GDP.
It's worth noting that yield curve inversion predicted recession four months ago:
> The 2-year and 10-year Treasury yields inverted for the first time since 2019 on Thursday, sending a possible warning signal that a recession could be on the horizon.
It started inverting last year. The inversion steepened. It is now in a very deep inversion in the long end that is marching steadily to lower maturities.
This is something that everyone who is actually interested in the topic will have heard of because it's been mentioned repeatedly by the experts. And yet this thread is filled with confident statements by people who clearly have put zero effort into forming their opinion. Sad.
Not "to some", two back-to-back negative GDP stats has been the definition of a recession for my entire life. Now suddenly it's questionable, because the current administration would like to shrug away its failures, and too many in the media are helping them do it.
This ad-hoc re-definition of language to suit political purposes is scary and Orwellian.
In the USA, "officially" a group of 8 economists at the National Bureau of Economic Research decides when a recession starts. I suspect other countries have their own definitions.
"The NBER's definition emphasizes that a recession involves a significant decline in economic activity that is spread across the economy and lasts more than a few months. In our interpretation of this definition, we treat the three criteria—depth, diffusion, and duration—as somewhat interchangeable. That is, while each criterion needs to be met individually to some degree, extreme conditions revealed by one criterion may partially offset weaker indications from another. For example, in the case of the February 2020 peak in economic activity, the committee concluded that the subsequent drop in activity had been so great and so widely diffused throughout the economy that, even if it proved to be quite brief, the downturn should be classified as a recession." [1]
Planet Money (podcast on NPR) did an episode [2] a little while ago about it that I recommend listening to. They talk with one of the 8 economists. It was honestly refreshing hearing the economist talk about it, I got the impression that it was a more neutral take on the circumstances rather than pushing a narrative.
In other words, if it looks like a recession and quacks like a recession then it might be a recession.
And yes it much more complicated - especially it also depends on how much outside pressure NEBR has. I think there is a large pressure not to declare recession since we still have a high inflation and feds needs to continue raising rates.
I don't like GDP as a measure of how well our economy is doing.
We need a whole new measurement. A quality of life index, which measures the real cost of living, not in dollars, but in number of hours required to earn the necessities of life: shelter, food, water, and by extension, the things required to get those: transportation (to and from work, avg distance), certification (aka education), and medical insurance.
The Sahm Rule real time recession indicator, which has been a pretty accurate indicator of recessions since the '60s, is saying that we've come out of the pandemic-induced recession, and not yet started a new one.
But we can stop lying about the definition of a recession. Biden admin changing the definition to avoid loss political points is about as nonsensical as blaming inflation squarely on Putin. The disinformation needs to stop.
Wow the scale on the historic chart on that page is just nuts! Looking at Q2 & Q3 of 2020 - it just dwarfs everything and nearly makes the chart unreadable for the scale of numbers that we usually think of as important - where a full percent is real and two percent is big. I mean it makes sense given the pandemic, but seeing the economy shrink at a 30% annual rate one quarter and then bounce right back by the same amount the next quarter is insane. I wonder the last time it changed that quickly.
The way that the White House, and by extension the administrative branch of the government has decided to redefine "recession" and imply that the economy is doing really well right now is actually scary.
These people do have huge levers that control our lives that they can pull. Their actions do have massive effects on the American economy, and by extension the economy of the rest of the world. The actions they're taking are legitimately horrifying.
I seriously don't think these people understand what the lives of normal people are actually like. The white house had the gall to put out a tweet bragging that gas prices had come down, and that this could be saving people $35/mo, and how much that is helping.
Gas if still $4.2 national average per gallon. That's HUGE, and the direct actions of the administration are to blame for this.
The swing in the higher granularity data going to quarterly is .. impressive. Scary impressive. If its not a measurement artifact, its a real quirk of the situational pressures.
[+] [-] partiallypro|3 years ago|reply
I think we all know that if a Republican were President the entire narrative would shift, with most of the press saying we're in recession while Fox, etc would say unemployment is still low which is what matters.
How did we get to a point where actual data can be outright denied or absorbed based on your political viewpoint? It's really pathetic. People will go to the ends of the earth just to protect politicians. Worse, even if we're in recession it's pretty mild, so I don't even know why there is so much handwringing about it.
[+] [-] mywittyname|3 years ago|reply
>How did we get to a point where actual data can be outright denied or absorbed based on your political viewpoint?
Because the actual data is sending mixed signals. People equate recessions with job losses, but job growth is still high and unemployment remains incredibly low. Businesses equate recessions with reduced demand for goods and and services, yet demand remains strong enough to push prices and profits to record levels.
GDP has long been criticized for being a poor metric for the economy. But it's always been correlated enough with overall economic sentiment that it was Good Enough. It looks like we've finally gotten ourselves into a situation where the edge case issues with GDP surface.
Lastly, not everyone feels recessions the same. I was one of those people who benefited from the financial crisis, because I kept my job and lived in an apartment, so my income was going up while my costs went down. That doesn't take away from the devastation it caused to other people.
[+] [-] InefficientRed|3 years ago|reply
That said... my wealth manager has been and still is waffling when I ask him if we are in a recession. It's NOT just political; I don't even know my wealth manager's politics and I have absolutely no doubt he puts fiduciary responsibilities first and makes fact-based assessments.
Unemployment is low and the trend is mostly flat. Housing is doing fine. Consumer balance sheets are strong. Are we entering a recession? I think so. But there are a lot of "but"s which really do impact how smart and impartial people are thinking about where and how to deploy capital.
When I ask my wealth manager "are we in a recession?", he basically says "We might be in a recession. We might not be in a recession. Either way, we should not invest as if this is a typical recession."
Which I think pretty much sums things up.
[+] [-] rockemsockem|3 years ago|reply
As pointed out by another commenter the NBER has never failed to declare a recession after two consecutive quarters of GDP reduction. This is a preliminary report, I would expect them to wait for the full report to actually declare it.
These things work a certain way. Whether that way is good or bad isn't relevant to this particular point, by expecting that way to change on a whim you're just being impatient.
[+] [-] tfehring|3 years ago|reply
My impression is that layoffs have been mostly isolated to tech at this point. I do know a couple of recruiters (outside of tech) who've been laid off lately, so that could be the canary. But my impression is that all of the quantitative labor market indicators we have are still strong - likely stronger than we've ever seen in a recession.
[+] [-] smsm42|3 years ago|reply
Instead what we're getting is "holistic criteria" which means pundits can argue on TV for hours (which they probably love to) and everybody gets to keep their partisan views and there's no objective meaning to any terms anymore. No wonder people have low confidence in "experts" and grasp at whatever they find on the internet to find some clarity.
[+] [-] s1artibartfast|3 years ago|reply
This is like saying sure you can't buy as much bread, but at least you are working longer.
The fact that more people are working to produce less than before describes an economy in decline.
What am I missing here?
[+] [-] RC_ITR|3 years ago|reply
This is such a weird information play. Recessions are defined after the fact by NBER. Always have. Always will be. There’s no set criteria.
Informally people cite the two quarters rule, but 2/5 past recessions (2000 and 2020) don’t follow that rule.
No one wants to communicate that nuance so we get mass confusion.
Sad to see that confusion even exists in HN.
What’s actually concerning to me is exactly that: every nuanced discussion in politics is now some gotcha where a reporter asks “yes or no” to a question that has a detailed answer.
[+] [-] unknown|3 years ago|reply
[deleted]
[+] [-] babypuncher|3 years ago|reply
[+] [-] unknown|3 years ago|reply
[deleted]
[+] [-] throwaway6734|3 years ago|reply
Also, Powell himself has been iffy about whether or not we're in a recession
[+] [-] rvz|3 years ago|reply
That's because all politicians are liars and the media spin doctors will ensure that their lies gaslight the general public into believing them. The problem is, they can't deny the numbers and they know it, hence why they are beginning to change definitions.
Given the last administration brought the US into a recession 2 years ago with the same opposition, media and critics screaming at them, there is no more denying that this is a recession with these figures. The difference is, the current administration is trying to escape by changing definitions, which doesn't give much confidence in them and indicates that it may get even worse.
Now you see the same ones down-playing the inflation fears in November 2021 are trying to down play this recession very poorly with lots of damage control to save themselves and their careers. In reality we were no better off, and it looks like this is worse than the last administration.
And finally, the indicators for this with surging inflation was there since November 2021. Instead we have 'Stock market up 1% today on both this news and decades-high inflation.' [0] and later 'We are most certainly not in a recession.' [1]. Not only you have to look at it in the long term - not in 1 day, but you also don't wait for the figures to come out for you to then prepare for the worst. By then it is too late.
The denial is indeed pathetic.
[0] https://news.ycombinator.com/item?id=29508238
[1] https://news.ycombinator.com/item?id=31441710
[+] [-] unknown|3 years ago|reply
[deleted]
[+] [-] mym1990|3 years ago|reply
[+] [-] rayiner|3 years ago|reply
Our elites—I don’t mean that pejoratively, but descriptively—used to adhere to institutional values. When I joined a prominent NYC law firm 10 years ago nobody commented on the fact that it was named after someone who argued the pro-segregation other side of Brown v. Board. The institution, not only of the firm but the legal process itself-where even segregationists are entitled to their day in court—was a credo that transcended individual politics or individual notions of “justice” or “human rights.”
That flipped sometime in the last decade. Our institutions have been overtaken my millenarianism: https://en.wikipedia.org/wiki/Millenarianism. It’s a belief system that transcends institutional values—in the law, the media, everywhere.
Do you remember “The Resistance?” Where Clinton-supporting government employees pledged to work within the bureaucracy to defeat the agenda of the duly elected President—their boss? The craziness we’ve been seeing from conservatives lately is a reaction to that total abandonment of institutional values.
[+] [-] MisterBastahrd|3 years ago|reply
[+] [-] seanmcdirmid|3 years ago|reply
Ideologies tend to deal in binaries. We are either in a recession and the sky is about to fall or everything is great. Jobless recoveries or full employment recessions don't fit into binary narratives.
[+] [-] roflyear|3 years ago|reply
[+] [-] unknown|3 years ago|reply
[deleted]
[+] [-] ffggvv|3 years ago|reply
[+] [-] smilebot|3 years ago|reply
I like to believe that there is a bigger picture here. Oversimplification: An economic downturn when there is a rise in nationalist sentiment had given birth to people like hitler.
Maybe if the majority perceives that everything is fine, when it isn’t, might help prevent that?
[+] [-] yuan43|3 years ago|reply
That makes two back-to-back quarters of real GDP contraction. To some, this is a recession, but it's the NBER that puts the stamp on it. AFAIK, NBER has never failed to put the recession stamp on back-to-back drops in GDP.
It's worth noting that yield curve inversion predicted recession four months ago:
> The 2-year and 10-year Treasury yields inverted for the first time since 2019 on Thursday, sending a possible warning signal that a recession could be on the horizon.
https://www.cnbc.com/2022/03/31/2-year-treasury-yield-tops-1...
It's also worth noting that 2y-10y yields have been deeply inverted (~20 basis points) for most of July and are in that state today.
Still one more thing to note: the earliest warning signal of them all appears to be an inversion of the eurodollar futures curve:
https://www.reuters.com/business/finance/eurodollar-futures-...
It started inverting last year. The inversion steepened. It is now in a very deep inversion in the long end that is marching steadily to lower maturities.
[+] [-] Nimitz14|3 years ago|reply
This is something that everyone who is actually interested in the topic will have heard of because it's been mentioned repeatedly by the experts. And yet this thread is filled with confident statements by people who clearly have put zero effort into forming their opinion. Sad.
[+] [-] _marlowe_|3 years ago|reply
[+] [-] melling|3 years ago|reply
At least at some point, in order to bring a country out of the recession.
[+] [-] everybodyknows|3 years ago|reply
Can anyone enlighten us non-specialists as to how that particular contract works?
[+] [-] markus_zhang|3 years ago|reply
[+] [-] badrabbit|3 years ago|reply
[+] [-] foobarian|3 years ago|reply
[+] [-] NeverFade|3 years ago|reply
Not "to some", two back-to-back negative GDP stats has been the definition of a recession for my entire life. Now suddenly it's questionable, because the current administration would like to shrug away its failures, and too many in the media are helping them do it.
This ad-hoc re-definition of language to suit political purposes is scary and Orwellian.
[+] [-] ConceitedCode|3 years ago|reply
"The NBER's definition emphasizes that a recession involves a significant decline in economic activity that is spread across the economy and lasts more than a few months. In our interpretation of this definition, we treat the three criteria—depth, diffusion, and duration—as somewhat interchangeable. That is, while each criterion needs to be met individually to some degree, extreme conditions revealed by one criterion may partially offset weaker indications from another. For example, in the case of the February 2020 peak in economic activity, the committee concluded that the subsequent drop in activity had been so great and so widely diffused throughout the economy that, even if it proved to be quite brief, the downturn should be classified as a recession." [1]
Planet Money (podcast on NPR) did an episode [2] a little while ago about it that I recommend listening to. They talk with one of the 8 economists. It was honestly refreshing hearing the economist talk about it, I got the impression that it was a more neutral take on the circumstances rather than pushing a narrative.
[1] https://www.nber.org/research/business-cycle-dating
[2] https://www.npr.org/2022/06/24/1107581150/recession-referees
[+] [-] tlogan|3 years ago|reply
And yes it much more complicated - especially it also depends on how much outside pressure NEBR has. I think there is a large pressure not to declare recession since we still have a high inflation and feds needs to continue raising rates.
[+] [-] throw8383833jj|3 years ago|reply
We need a whole new measurement. A quality of life index, which measures the real cost of living, not in dollars, but in number of hours required to earn the necessities of life: shelter, food, water, and by extension, the things required to get those: transportation (to and from work, avg distance), certification (aka education), and medical insurance.
[+] [-] MaysonL|3 years ago|reply
https://fred.stlouisfed.org/series/SAHMREALTIME
[+] [-] ken47|3 years ago|reply
[+] [-] deltasevennine|3 years ago|reply
There have been people in the past who noticed the cycle and came up with methods at stopping the cycle.
[+] [-] markus_zhang|3 years ago|reply
[+] [-] wallawe|3 years ago|reply
[+] [-] sethjr5rtfgh|3 years ago|reply
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[+] [-] sethjr5rtfgh|3 years ago|reply
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[+] [-] oofbey|3 years ago|reply
[+] [-] s1artibartfast|3 years ago|reply
This is like saying sure you can't buy as much bread, but at least you are working longer.
The fact that more people are working to produce less describes an economy in decline.
What am I missing here?
[+] [-] ramoz|3 years ago|reply
Bits about a “recession” come up around the 12-18min mark with relevant info beyond.
That said, I don’t know enough to map/equate these simple types of economic explanation with current actual state.
[1] https://youtu.be/PHe0bXAIuk0
[+] [-] thepasswordis|3 years ago|reply
These people do have huge levers that control our lives that they can pull. Their actions do have massive effects on the American economy, and by extension the economy of the rest of the world. The actions they're taking are legitimately horrifying.
I seriously don't think these people understand what the lives of normal people are actually like. The white house had the gall to put out a tweet bragging that gas prices had come down, and that this could be saving people $35/mo, and how much that is helping.
Gas if still $4.2 national average per gallon. That's HUGE, and the direct actions of the administration are to blame for this.
[+] [-] ggm|3 years ago|reply
[+] [-] unknown|3 years ago|reply
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[+] [-] tiahura|3 years ago|reply
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[+] [-] ramesh31|3 years ago|reply