The economy may look like it’s in recession, but we still don’t know for sure

In an aerial view, shipping containers sit idle at the Port of Oakland on July 21, 2022 in Oakland, California. Truckers protesting California labor law Assembly Bill 5 (AB5) have shut down operations at the Port of Oakland after blocking entrances to container terminals at the port for the past four days. An estimated 70,000 independent truckers in California are being affected by the state AB5 bill, a gig economy law passed in 2019 that made it difficult for companies to classify workers as independent contractors instead of employees. The port shut down is contributing to ongoing supply-chain issues. 

The economy was in line with a definition of a recession in the second quarter. We don't know if it's officially declared or not.

The Business Cycle Dating Committee of the National Bureau of Economic Research doesn't use the same definition as the one commonly accepted of at least two quarters of negative growth.

The NBER defines a recession as a decline in economic activity that lasts more than a few months.

That could be a sign of decline. The NBER has declared a recession every time GDP has fallen for at least two quarters in a row. The Bureau of Economic Analysis reported that the second quarter GDP dropped by 0.9%.

The NBER didn't use GDP as a factor in its thinking, and it declared a recession in 2001.

There are no major Wall Street economists who think the U.S. economy was in a recession during the first half of the year.

"We weren't in a recession for the first half of the year but odds are rising we will be by the end of the year."

The NBER won't declare a recession because the jobs market is still not back to pre- Covid levels. There are other people.

Too many jobs were created by us. We had low layoffs and high unfilled positions. He said consumer spending, business investment were all good. I don't think they'll declare a recession.

Powell questioned the accuracy of the GDP data after he said the economy was not in a real recession.

Powell said that the current situation doesn't seem like a recession. The labor market is sending a signal of economic strength that makes you wonder if the GDP data is accurate.

While the NBER is not a household name, the government and business news outlets take the private research organization to be a good indicator of expansion and contraction.

Six factors are believed to be used by the organization.

1. Real personal income minus transfer payments
2. Nonfarm payrolls
3. Employment as gauged by the Bureau of Labor Statistics’ household survey
4. Real personal consumption expenditures
5. Sales adjusted for price fluctuations
6. Industrial production

Tim Quinlan, senior economist at Wells Fargo, said in a client note that if this definition feels involved, it's because it is. It is difficult to define a recession and how deep it is throughout the economy.

Quinlan said that conditions are close to the criteria of the NBER.

He wrote that it would be more difficult to define a recession in light of the decline in economic activity. The job market still has legs and real consumer spending continues. It is too early to say the end of this expansion.

The economy has become a political issue.

The White House ruffled some feathers when it said the economy is not in a recession. Critics accused the administration of trying to change a long-held definition and the media of being compliant.

holistic data such as the labor market, consumer and business spending, industrial production, and incomes figure into the definition of a recession.

It is unlikely that the decline in GDP in the first quarter of this year will lead to a recession, according to the post.

Policymakers will try to explain why the U.S. economy is not in a recession. Seema Shah is chief global strategist at Principal Global Investors. There are other timelier economic data that are not consistent with a recession.

The economy is not out of the woods even if the NBER doesn't declare a recession. The dangers of higher interest rates, persistent inflation, and a historically sour mood on behalf of consumers and businesses are significant.

Many economists don't think a first-half recession is likely, but they think one is likely over the next year or so.

People have a lot of bad feelings. The Moody's economist said it was as dark as he had ever seen. The anticipation of a bad economy is something I have never seen before. A downturn is a loss of faith. Businesses lose faith in their ability to sell what they produce when consumers lose faith in them. We lose faith and end up in a recession.