Factsheet: Is the U.S. Economy in a Recession? How Does Recession Dating Work?


Policymakers and economists alike are debating whether the United States is entering, has already entered, or is about to enter a recession, as inflationary pressures continue to drive US family prices higher. continue.

This debate is complicated by the fact that current economic indicators are inconsistent with each other, tend to deviate from past recessionary trends, and the definitive answer is elusive. The recent performance of the U.S. economy meets the widely used two-quarter rule (his two consecutive quarters of contraction in gross domestic product can indicate a recession), but the economy is actually It’s not clear if it’s shrinking. A very strong current labor market. Just last week, the US Bureau of Labor Statistics announced that the US economy added her 528,000 jobs in July 2022.

So what is a recession and how do we know when the U.S. economy is really in a recession? Does it matter? This factsheet not only answers these questions, but also sheds light on how recessions are dated and why recession dating is a complex and necessary economic calculation.

What is a recession?

According to the National Bureau of Economic Research, the agency that analyzes the business cycle in the United States, there are three characteristics that define a recession. ie:

  • A recession is essentially a contraction of the economy. That means the economy is actively contracting. This is not an analysis of the actual health of the economy, but rather the direction it is headed. If the economy is going bad, it’s a recession. If the economy is improving, it’s expanding, even if it’s very slow and started badly.
  • Various economic indicators contribute to the calculation of this activity, but in general the results closely reflect gross domestic product. Some indicators specifically mentioned by the NBER include personal income minus transfers, non-farm employment, consumption levels, retail sales, employment and industrial production, but this is not a comprehensive list. There is none.

What is the difference between recession and recession?

There is no formal definition of depression. The term “recession” usually means a particularly severe recession. A decline of 10% or more in GDP is one rule of thumb, and most people think that recessions usually last longer than relatively short ones. The previous US economic depression was the Great Depression of the 1930s.

The Great Recession was not severe enough to be considered a Great Depression, even though it was the deepest US recession since the Great Depression. The COVID-19 recession, while perhaps deep enough to be considered a recession, was too short-lived.

Who decides when a recession begins and ends?

In the United States, the National Bureau of Economic Research has a standing committee, and since 1978, this committee has been officially responsible for identifying the dates of recessions. (However, the committee does not declare or date a recession.) The current presidents of the NBER are Robert Hall of Stanford University, Robert J. Gordon of Northwestern University, and James of Massachusetts Institute of Technology.・Determine the members of the committee, including Portaba and Valerie. Lammy at UC San Diego, Christina and David Romer at UC Berkeley, James Stock at Harvard, and Mark W. Watson at Princeton. Committee members are typically macroeconomists and other researchers who study business cycles.

Other important details are:

  • NBER is a private, non-profit research organization, not a government agency. However, the recession dates calculated by the NBER are considered official and are recognized by all US federal economic agencies, including the US Bureau of Labor Statistics, the US Bureau of Economic Analysis, and others.
  • Similar models have been adopted by other countries using official Business Cycle Dating Commissions, including Japan, France, Spain, Brazil and Canada. The United States is nothing unusual or unique in this regard, but in most other countries the committee does not have as much formal consent as his NBER committee.

How Does Recession Dating Work?

The NBER Commission uses the economic indicators above to identify peak months for the economy. The recession begins the month after its peak. The commission then identifies the month in which the trough occurred, usually several months after the trough occurred. Its bottom month is considered the end of the recession.

For example, in identifying the dates of the COVID-19 recession, the Commission labeled the peak month as February 2020. This means that the recession start date is March 2020. The valley month is April 2020, which the NBER believes includes, so the recession was a two-month recession from the beginning of March 2020 to the end of April 2020.

Why not use the 2/4 rule?

While the two-quarter rule is a useful monitoring tool for the more casual observer of the economy, it is not used by economists in their formal analysis of business cycles and in identifying when recessions occur. For example, the 2001 recession did not result in two consecutive quarters of lower economic growth. Other indicators point to a contracting economy, and the NBER classified it as a recession, while GDP contracted by only a quarter of his.

Also, the NBER does not use GDP alone to indicate recession dates, as GDP calculations can introduce measurement errors. For example, like the 2001 recession, the 2008 recession wasn’t his second consecutive quarterly decline at the time, but subsequent revisions to GDP showed negative growth for the period. . In 2008, the NBER judged the economy to be in recession, even though the Bureau of Economic Analysis showed positive GDP growth. The Commission was able to confirm from other indicators that the economy was performing very poorly.

Moreover, countries using the 2/4 rule must “roll back” the date of the recession if subsequent revisions show that GDP did not actually decline during a given period. may not be

What about the Sahm rule, or alternative methods of recession dating?

The Sahm rule considers an economy to be in recession if the 3-month average of the unemployment rate over the past 12 months is at least 0.5 percentage points higher than the lowest value. Initially, it was not intended to pinpoint when a recession would occur. Rather, it was intended to predict a recession before it began so that policymakers could respond accordingly, or to use it as a trigger to initiate automatic stabilization.

The Sahm rule is better suited for predicting recessions than other commonly proposed methods. For example, an inverted yield curve where the market interest rate for short-term borrowing exceeds the market interest rate for long-term borrowing. Applying the Sahm rule to past recessions yields very few false positives.

Some economists, such as Christina and David Romer at the University of California, Berkeley, prefer deterministic models that strip away human judgment. Some tend to use slightly different groups of aggregate economic indicators.

The recessions produced by these alternative models are typically very similar to those identified by the NBER Dating Commission. The NBER method is often determined with a significant lag so that recession dates do not need to be changed for new or recalculated data. A recession date can be calculated after two months, but the NBER method can take more than a year.

How Does Inequality Affect Recession Dating?

Inequality has a big impact on the dating of recessions. Economic growth calculations are usually done at the aggregate level. In other words, even though the broader economy is growing, some demographic groups or geographic regions may still experience shrinking economies. The aggregation of this data, combined with the fact that more and more wealth and income is controlled by fewer people, could make the expansion of the top earners look like the expansion of the economy as a whole. means that it’s not.

In fact, this is similar to what happened during the Great Recession of 2007-2009. Initially, the bottom 50% of the income distribution fared relatively well, supported by recovery packages and increased use of income support programs and other government transfers. But when those programs ended and US policymakers turned to austerity, the bottom 50% suffered. (See Figure 1.)

Figure 1

Cumulative growth in disposable income per household since 2007 ($2012 real)

As Figure 1 shows, the bottom 50% of people entered a unique recession as a group that lasted at least from 2010 to 2013. Because the economy as a whole grew during this period. This period is not a recession.

Why Recession Dating Matters?

Different stakeholders have different reasons for caring about recession dating. This is important for macroeconomists who investigate the causes and consequences of recessions and need to know how to identify whether a particular observation in the data occurred before, during, or after the recession. ie:

  • A recession can affect economic activity and the decision-making of households and businesses, all of which can also affect inflation.
  • Recession dates clearly have political implications but are not intended to signal to the public or policy makers. This prevents the possibility of politics masking the reality of the economic situation of American workers and households for political gain.

So, is the US economy currently in recession?

Simply put, it’s hard to say. The two-quarter rule shows that it does, but a recession has never been declared without jobs being lost. Hundreds of thousands of jobs are added to the US labor market every month.

Moreover, although GDP has contracted over the past two quarters, a related measure of economic growth, Gross Domestic Income (a measure of gross output that aggregates income rather than production), suggests the economy is growing. I’m here. GDP and GDI should be equal to each other, but there is always a mismatch between them. The two indicators now give very different views of the economy, with GDP now showing that the economy is contracting and GDI showing the opposite.

What is clear is that if the U.S. economy plunges into a recession, or if it has been announced and has not yet been announced, it could look very different from previous recessions.





Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

malini sex video kings-porno.com xxx saniya mirja 89. com pornoqui.com kolkata girls need sex punjabi blue film ultraporn.mobi shalimargame سكس تجسس arabpussyporn.com احلى نيك محارم desi wallpaper for whatsapp fuckhindi.com www.xxxvedeos
reddit indian porn iwanktv.info sex.xnxx porntui ebonyporntrends.com indian sax vedeo sexy nangi monatube.mobi hd pron movie ليلة الدخلة سكس largetube.net سكس الجزاير jav.guru desixxxhd.com kajol xnxx
girls getting fucked firetube.mobi fuckingvideos فيديوهات نياكة porn-loop.net سكس رومانسى مصرى brawling go 134 hentaisin.com nama naka telugu wap .com pornoguru.info saxyfilm احلى نيك fransizporno.com رقصسكس