Janet Yellen says the US economy is not in a recession despite a 2nd straight negative GDP print because the job market is strong

Despite Thursday's negative second-quarter GDP print, the US economy is not in a recession.

In the first quarter of the year, GDP fell 1.6% and in the second quarter it declined by 0.9%. A recession is defined by an unofficial rule of thumb as two back-to- back quarters of negative GDP growth.

The strong job market is a reason to believe that the US economy has not entered a broad slowdown in growth.

A recession is a broad-based weakness of the economy. "That is not what we are seeing right now," she said. In the first half of the year, the US economy has added 2.7 million new jobs, with 1.1 million being created in the second quarter alone.

In prior recessions, an average of 240,000 jobs were lost in the first three months of the downturn. There are 1.9 vacancies for every unemployed person who is looking for a job.

Future consumer price gains are likely to come down in the days ahead as inflation remains elevated. A drop in commodity prices, including oil and food, would be a big relief for consumers.

Whether or not the US economy is actually in a recession is a meaningless question. A recession is defined by the National Bureau of Economic Recession as a decline in economic activity that lasts more than a few months.

While each of the three criteria needs to be met individually to some degree, extreme conditions revealed by one criterion may partially offset weaker indications from another.

Jobs are a large part of the criteria. With the unemployment rate still near a 50-year low, it could take a surge in job losses for the NBER to be on board with calling the current economic downturn a recession.