We’re Not in a Recession—At Least Not Yet
Here are the facts about whether we’re in a recession or not.
Are we in a recession? There has been a lot of discussion on this topic but most of it has frustrated me because it’s rooted in politics versus the true definition of “recession.” Most people believe a recession is defined as two quarters of economic decline. But that is not the actual definition. There’s only one entity that has the authority to determine if our country is going through a recession: the National Bureau of Economic Research (NBER).
The NBER has a very broad definition of a recession, which has not changed, but in general, it considers six different factors: our personal income, payroll employment, civilian employment, consumption, retail sales and industrial production. Five out of these six factors are currently positive, so if we’re in a recession, then this is the best recession ever.
"The economy may be softening, but it’s still doing well."
If we take a look at our gross domestic product (GDP), Q1 has fallen 1.6% while Q2 dropped 0.9%. However, GDP is a difficult calculation and doesn’t truly tell the story. Many people consider 2020 as a period of recession, but I disagree. It was not a recession – it was an economic lockdown, and we’re now reopening our economy. In fact, in the first half of 2022, we’ve had 450,000 new jobs every month, revenue has increased by 10%, profits across the board are up by 3%, and as of this publication, 70% of reporting companies are beating their estimates. In general, the economy is softening, but it’s still doing well.
There’s a lot of wacky numbers right now, but I strongly believe we’re not in a recession. With that said, I do believe that one is coming in the next 18 to 24 months. It doesn’t matter that news outlets say a recession is already here. They’re wrong, and you shouldn’t take their word for it.
If you need more details about this topic or have any questions about the market or economy, call or email me. I’m always happy to help!
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