Thursday’s gross domestic product report confirmed what many economists had already suspected.
This important economic indicator fell by 0.2% in the second quarter (annualized to -0.9%) – and since the U.S. economy also retracted at the beginning of the year, the country is in what is considered the informal definition of a recession.
It’s worth noting that only the National Bureau of Economic Research can officially declare whether or not the U.S. is actually in a recession.
That’s because, while the GDP has fallen two quarters in a row, there are other factors at play when it comes to the entire economic picture, which the NBER incorporates into its own assessment of possible recessions.
“The economy is tepid, it’s treading water, basically,” said Stephan Weiler, a professor of economics at Colorado State University, co-director of CSU’s Regional Economic Development Institute and a former Federal Reserve research officer. “It’s hard to get a feel for what direction we’re headed in, since even though business investment, construction, and government spending are declining, consumer spending and job growth remain relatively strong.”
That’s why Weiler cautions against using “recession” to describe the current economic situation in the U.S. Here’s a look at what he took out of the GDP report, and what he’ll be watching in the common months.
Stephan Weiler, a professor economics at CSU, cautioned against saying the U.S. is in a recession.
The GDP report isn’t set in stone
A 0.2% decline is significant, but not massive, which is why Weiler says revisions to the GDP report in late August and September could tip the scale in another direction.
To put the size of the GDP fluctuations into context, he pointed to a graph from the Bureau of Economic Analysis illustrating the U.S. economy’s growth and declines since 2018.
Original source can be found here.
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