Latest data shows economy in recession with stagflation

Consumption is falling, manufacturing is declining and inflation is reducing discretionary income.

The first estimate for GDP growth in the second quarter of this year will be available on July 28. If that number is negative, then the economy will be in a recession since the first quarter number was also negative. Based on the most recently released data, it looks like the economy is in recession. Worse, since inflation is running at a 40-year high, the economy is experiencing stagflation too.

Technically, it is the National Bureau of Economic Research (NBER) that officially declares a recession based on additional factors, like the unemployment rate. The NBER will likely say that even though we had two successive quarters of negative growth, the economy is not actually in recession.

They will argue that since the unemployment rate is below 4%, usually considered a full employment level, a recession is not yet here. The reality is that during this recession, the unemployment rate will stay below historical precedent.

That’s because after the pandemic ended, the labor force participation rate remained below the pre-pandemic level. Since the economy did grow by nearly 6% last year, business currently has 11 million open jobs, while there are less than 6 million unemployed…