The U.S. has now seen two consecutive quarters of decline in the Gross Domestic Product (GDP), which is the frequent definition of what makes an economic recession. U.L. Lafayette economics professor Gary Wagner says the true definition is more complicated than that, but…
“Technically, a definition of ‘recession’ is much broader than just two consecutive quarters of a decline in GDP…but I think it is highly likely the economy is in a recession right now,” he says.
The White House and Federal Reserve Chairman Jerome Powell say otherwise. so does Treasury Secretary Janet Yellen, but Wagner says there are abundant indicators of recession from almost all aspects of the economy…except labor, which remains steady and growing right now…:
“Typically what we see during a recession is month-to-month job gains becoming negative. So, if we see those numbers becoming negative that will put the nail in the coffin.”
Wagner says it’s been over 70 years since there were two straight quarters of GDP shrinkage that did NOT create a recession. He says the positive employment and unemployment numbers – which seemingly belie a recession – are themselves a distortion of indicators, based on recent events; namely: the pandemic.
“People were short staffed because of the pandemic, and staffing levels are not back to normal. The unemployment rate right now – in my opinion – is really poor indicator of how the economy is doing.”
He says if unemployment statistics included those who lost work during the pandemic…drew all their benefits since and have quit looking for work, they’d be 3 to 4-percent higher. He suspects a recession is already upon us.
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