The US Is Now Officially in a Recession

Negative growth for two successive quarters is a recession. With 9.1% inflation, we are currently experiencing stagflation too.

The Bureau of Labor Statistics just released its first estimate for gross domestic product (GDP) growth in the second quarter. The number was -0.9%. That is the second consecutive quarter of negative GDP growth. That means the country is officially, according to the textbook economics definition, in a recession.

Actually, that may not be exactly right.

Although the data fits the classic definition, the government decided that an independent agency, the National Bureau of Economic Research (NBER) should make the official determination. It may take some time, up to a year, to declare a recession.

The NBER considers other factors, like unemployment, when officially declaring a recession. Economists, there are likely to say that since unemployment is under 4%, we are not in a recession.

Textbook Definition of a Recession

Nonetheless, as an economist in my own right, I say that since the last two quarters indicate the economy is shrinking, we are in a recession. The NBER defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.”