{"id":30512,"date":"2022-07-28T02:15:00","date_gmt":"2022-07-28T02:15:00","guid":{"rendered":"https:\/\/www.lifeandnews.com\/articles\/?p=30512"},"modified":"2022-07-29T23:34:08","modified_gmt":"2022-07-29T23:34:08","slug":"is-the-us-in-a-recession-well-that-depends-on-whom-you-ask-and-what-measure-they-use","status":"publish","type":"post","link":"https:\/\/www.lifeandnews.com\/articles\/is-the-us-in-a-recession-well-that-depends-on-whom-you-ask-and-what-measure-they-use\/","title":{"rendered":"Is the US in a recession? Well, that depends on whom you ask \u2013 and what measure they use"},"content":{"rendered":"\n

D. Brian Blank<\/a>, Mississippi State University<\/a><\/em><\/p>\n\n\n\n

The U.S. economy shrank at an annual rate 0.9%<\/a> from April through June, the Bureau of Economic Analysis estimated on July 28, 2022. It follows a contraction in gross domestic product of 1.6% recorded in the first quarter of the year.<\/em><\/p>\n\n\n\n

Some observers suggest the two quarters of contraction constitute<\/a> a \u201ctechnical recession\u201d or the \u201cunofficial start\u201d of one<\/a>, while others suggest it at least raises fears<\/a> or signals it\u2019s on the way<\/a>. Federal Reserve Chair Jerome Powell apparently thinks otherwise. On July 27<\/a>, after raising interest rates<\/a> 0.75 percentage point, Powell told reporters, \u201cit\u2019s a strong economy and nothing about it suggests that it\u2019s close to or vulnerable to a recession.\u201d<\/em><\/p>\n\n\n\n

Confused about whether the U.S. is in a recession or how to know when one hits? If you are, join the club<\/a>.<\/em><\/p>\n\n\n\n

So The Conversation U.S. asked Brian Blank<\/a>, a financial economist at Mississippi State University, to explain what\u2019s going on in the economy and what factors determine if it is in recession.<\/em><\/p>\n\n\n\n

What did the latest GDP report tell us?<\/h2>\n\n\n\n

The economy is really hard to pin down right now.<\/p>\n\n\n\n

First, the question everyone is talking about now is the release of the less-than-impressive gross domestic product report, which showed a contraction<\/a> after adjusting for inflation.<\/p>\n\n\n\n

Some aspects of the report were positive, such as that consumption \u2013 how much people are buying \u2013 still rose a little and business fixed investment \u2013 how much companies spend on machines and factories \u2013 was flat, avoiding the drop previously forecast.<\/p>\n\n\n\n

As for some of the more negative news, investment in residential housing and property declined 14%, which makes sense given how much it had been rising since the pandemic upended the housing market<\/a>. In addition, a drop in private inventory investment<\/a> \u2013 a measure of how much stuff companies have produced but haven\u2019t yet sold \u2013 had perhaps the biggest impact on negative second-quarter figures. While inventory reductions can be a sign of strength from selling products, the decline reduced overall GDP by over 2 percentage points.<\/p>\n\n\n\n

And overall it means the U.S. economy technically has shrunk for two consecutive quarters, which is why you\u2019re seeing a lot more economists, journalists and others use the dreaded \u201cR\u201d word: recession.<\/p>\n\n\n\n

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