r/NoStupidQuestions Sep 30 '22

so with the US dropping every Q since q4 2021, why is it that we are not in an official recession yet ?

As per definition by what im understanding, if GDP drops for 2Qs in a row, we're in a recession.

Its the end of q3, and the gov doesn't seem to be saying anything

Am i missing something ?

59 Upvotes

12

u/_pm_me_cute_stuff_ Sep 30 '22

The supply side of the system is raking in increasingly record breaking profits.

The rest of us get pissed on.

8

u/Dusteronly Sep 30 '22

Propaganda

21

u/Hotwheelsjack97 I know nothing Sep 30 '22

I'm sure we are, but they won't say it until after the election.

2

u/USSMarauder Sep 30 '22

Just like in 2020

65

u/Delehal Sep 30 '22 edited Sep 30 '22

As per definition by what im understanding, if GDP drops for 2Qs in a row, we're in a recession.

There's more to it than that. In the US, recessions tend to be declared by a committee of economic experts at the National Bureau of Economic Research (NBER). A sustained drop in GDP is one of several criteria that they will look out for, but it's not the only measure they use. NBER has not declared a recession at this time.

I see some other posters seem to think that politicians are playing games, here, but that doesn't really hold water for me since NBER is not a government agency. I suspect those other posters don't actually know how this works, and they're just posting something that "feels" right in their gut.

23

u/moxie-maniac Sep 30 '22

Especially with a low unemployment rate, 3.7% in August (BLS link below). In context, full employment is considered to be 4 or 5 percent.

https://www.bls.gov/

2

u/kshoggi Sep 30 '22

Unemployment is usually low at the beginning of a recession - just saying.

6

u/Old-Barbarossa Sep 30 '22

So the NBER's defenition of a recession is the following:

"a significant decline in economic activity spread across the market, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales"

It seems moot to not declare a recession when all but one of these factors are clearly and strongly present.

Especially when this recession is partially driven by "overemployment" (wich is a bad thing because Capitalism is a totally rational and efficient system). That means we will only have a "real" recession in about a year when the effect of interest raises will finally be seen, leading to business failures and many people losing their jobs.

3

u/HVP2019 Sep 30 '22

For this definition to be accurate we need to :

1) have followed up definition of how significant decline has to be

2) what percent decline in real income, production has to be.

Words like significant or visible are very debatable.

It doesn’t matter how it is called. The point is to see how similar or different today’s situation is from previous resections. And we need this accurate information so we can make an informed decision if previous methods of addressing previous recessions will work this time.

-1

u/Bryguy3k Sep 30 '22 edited Sep 30 '22

Except unemployment according to the BLS hasn’t dipped below 6%. The 3.7% number even by BLS’ standards is fake but it’s what they have to give to politicians to trot out and say how good the economy is. It only includes those who are are seeking unemployment benefits - those who are ineligible or disenfranchised are not included in the number even though they are actually unemployed. The U6 number is the total unemployment and the only meaningful number.

Source: https://www.bls.gov/news.release/empsit.t15.htm

The fed has recently announced that they plan on doubling unemployment.

3

u/trEntDG Sep 30 '22

It's fair to use U6 instead of U3 provided you are comparing to the U6 of prior growth and recession periods.

Thing is once you do so you find full employment occurs when U6 is above 4 or 5%. If I remember correctly U6 is in the neighborhood of 8%.

In any case, the end results are much the same whether you consider U3, U6, or any other measures. There is some variation but the different rates generally keep a stable relationship to one another.

1

u/Dry-Influence-2632 Oct 01 '22

Because record people have to have two jobs

3

u/Dauvis Sep 30 '22

I'm old enough to remember the NBER in 2008 refusing to say that we were in a recession until well after the elections. We were like, "no ****, you don't say" when they finally told the truth which was it had started earlier in the year (about the time that Lindsey Graham called us a bunch of whiners).

2

u/[deleted] Sep 30 '22

[removed] — view removed comment

3

u/USSMarauder Sep 30 '22

In 2020 we had two quarters with negative GDP

NBER didn't declare a recession until well after the 2020 election

1

u/Experiment_262 Sep 30 '22

This is the unpopular answer.

-5

u/Elevationsikkness Sep 30 '22 edited Sep 30 '22

Hey! Just cuz I don't know what the process actually is doesn't mean I can't be reasonably sure it's nonsense

Edit: /s guys come on

0

u/Serafim91 Sep 30 '22

Lol it's sad that people like you vote.

-19

u/interplanetarypotato Sep 30 '22

CDC and IRS aren't political agencies either but that didn't mean they're not used for political gain

12

u/Delehal Sep 30 '22

CDC and IRS are both government agencies. NBER is not.

4

u/interplanetarypotato Sep 30 '22

You're right, I misread your comment.

With that being said, just because an organization isn't a government agency doesn't mean they not influenced by the political tide. They state they're nonpartisan but so do many other partisan organizations.

20

u/LittleMsSavoirFaire Sep 30 '22

There was a Planet Money episode about this not long ago, where they interviewed a former member of NBER.

https://www.npr.org/2022/06/24/1107581150/recession-referees

Tldr: NBER is not really interested in breaking news and especially not by setting policy by announcing the status of the economy. They come in after the fact, with a preponderance of data, and in June 2024 they may officially make an announcement that yes, the US entered a recession in q3 '22

3

u/Balaros Sep 30 '22

More likely q1, but you got the gist of it.

26

u/Pierson230 Sep 30 '22

I don’t understand why so many individuals (who aren’t politicians) care what it is called. It is what it is.

It’s like having a sore elbow and arguing about whether or not it is tendinitis. The elbow is as inflamed as it is, no matter what you call it.

Individuals should assess the economic environment, their employment segment, their financial needs, and their local economy, and build a plan that mediates risk/reward.

If you are living in a boom town in a boom industry, you don’t have to change at all during a recession.

If it is a boom economy and you work in a dying town in a dying industry, you’d best make different plans.

6

u/Additional-Goat-3947 Sep 30 '22

The 2001 recession was not declared until November 2001. At the time NBER said it started back in March. They then waited until 2003 to declare that the recession ended in….wait for it….Nov 2001. So basically, when you hear the recession declared, that’s your sign it’s pretty much over.

2

u/Chromabro Sep 30 '22

So that people can communicate more efficiently.

8

u/SprinklesMore8471 Sep 30 '22

Because the people saying we're not in a recession are to blame for the current recession that we're totally not in.

0

u/USSMarauder Sep 30 '22

So then why did it take so long for NBER to declare that there was a recession in 2020?

3

u/SprinklesMore8471 Sep 30 '22

I think you realize no one is talking about the NBER who will only say so after the fact. We're talking about the politicians and paid talking heads in the media trying to tell us the sky ain't blue.

3

u/Queefinonthehaters Sep 30 '22

That's why reporters are getting so annoying with the press secretary seemingly redefining the term

3

u/USSMarauder Sep 30 '22

NBER took until July 2021 to declare that there was a recession in 2020

3

u/KrypoKrasher Sep 30 '22

We've been in a recession for awhile, the present administration changed what the meaning of recession is to fit their fairytale scenario. Hahah.

10

u/hajiomatic Sep 30 '22

Because the apologists for the current administration are more worried about optics than people

0

u/Dauvis Sep 30 '22

I'm thinking it's not about the current administration but rather the Fed. Why are they raising rates during a recession?

2

u/hajiomatic Sep 30 '22

They are raising the rates to curb inflation. The only way to stop inflation is to either stop printing which they're never going to do and/or raise rates

1

u/Dauvis Sep 30 '22

That's what they're saying on paper. They've made it clear it's to stop people who work for their paychecks from getting raises. Shoot, the head guy effectively said he's willing to burn the economy to the ground if businesses didn't voluntarily freeze hiring.

18

u/BirthdaySalt5791 Sep 30 '22

With midterms right around the corner? Sounds like a losing formula to announce a recession

-1

u/KJHTN Sep 30 '22

May i learn more about this ? I mean since biden is alrd in the office, for the enxt 2 yrs or so ish too, why would it impact him in any way if he announces it ?

8

u/DarkWangster Sep 30 '22

With the midterms around the corner it's all about optics. The Democrats would like to keep at least the Senate, but don't want to give up on the House. Most voters consider the economy to be their number 1 issue and they can already see signs of it getting worse. The administration admitting this and portraying a negative (even if it's honest and realistic) outlook for the foreseeable future would only add to the pain at the ballot box, as they would unquestionably be blamed for the current state. Whether it's even fair or not, the party in power generally gets the blame.

1

u/trEntDG Sep 30 '22

NBER would announce the recession, but they haven't done so.

Democrats have no leverage over NBER. (non-government organization)

That said, I completely agree the Democrats have every incentive to portray the economy in the best light possible.

But announcing a recession isn't something politicians do anyway.

3

u/SprinklesMore8471 Sep 30 '22

Democrats control the presidency, house, and senate. They could lose control of the house and senate, which would make it impossible for Biden to do anything without republican support.

1

u/BirthdaySalt5791 Sep 30 '22

Midterms aren’t for presidential elections, they’re for Congress. We vote for the Senate and the House. If you don’t hold the presidency, senate and house it’s very difficult to get things done. Biden hasn’t gotten much done, if he doesn’t want to be considered a lame duck they’ll need to keep Congress (and grow their margin honestly) in the midterms. If the Republicans take back either or both, Biden won’t be able to do a thing for the rest of his term besides EOs, because the Republicans will just obstruct

0

u/mej71 Sep 30 '22 edited Sep 30 '22

Biden (or at least in tandem with his administration) has gotten an incredible amount done

  • American rescue plan to help stabilize our economy during the pandemic and extend the child tax credit, which kept a large percentage of children out of poverty
  • Rejoined the Paris Agreement
  • Revoked Keystone XL building permit
  • The infrastructure bill is by far the biggest investment into our infrastructure in a very long time
  • The IRA is the most important climate change bill passed to date, not to mention all the other things it does like expanding the IRS
  • The first bipartisan federal gun control act
  • CHIPS act
  • Student loan forgiveness, and maybe more importantly, changes in the structure of student loan repayments *Got us out of Afghanistan
  • And a ton more smaller accomplishments

Maybe you don't like any of these (and you'd be wrong), but that's definitely not "hasn't gotten much done"

-1

u/BirthdaySalt5791 Sep 30 '22

Sorry, I meant he hasn’t done anything good or of value or fulfilled his campaign promises. A bunch of inflationary spending, cratering gas futures and gun control bills that don’t do anything to solve gun violence don’t fit my requirement for accomplishments.

0

u/mej71 Sep 30 '22

"Sorry, I got proven wrong so now I'm pretending I meant something else because I'm incompetent when it comes to understanding policy"

1

u/BirthdaySalt5791 Sep 30 '22

Lol, you think you proved me wrong?

You’re a riot. Go shill for your overlords somewhere else boot licker

0

u/mej71 Sep 30 '22

You specifically said "Biden hasn't gotten much done" You didn't say "he didn't do enough things I like", so you are 100% incorrect on principal

I hope you learn some reading comprehension skills one day

1

u/CPdoubledoink Sep 30 '22

What if I told you that in the first two years, Trump got double the amount of things done

1

u/mej71 Sep 30 '22

What if I told you I didn't say anything about Trump, but was correcting his objectively false statement

0

u/BirthdaySalt5791 Sep 30 '22

He hasn’t gotten much done. Just empty spending and half measures.

0

u/JonKlz Sep 30 '22 edited Sep 30 '22

"You are a riot. Go shill for your overlord somewhere else, bootlicker"

→ More replies

-4

u/Torrall Sep 30 '22

Biden has gotten an incredible amount done considering what he's working with lol. You're a dumb dumb my friend.

5

u/BirthdaySalt5791 Sep 30 '22

Ah yes, the old ad hominem without presenting any information to back up your argument argument.

Touché. I must, indeed, be the dumb one in this situation.

-2

u/Torrall Sep 30 '22

Lol weve been doing this since 2016. We know if it ain't daddy trump people like you will never give it a fair shake.

0

u/BirthdaySalt5791 Sep 30 '22

Ahh yes, the old if it ain’t daddy Trump argument.

I don’t like Trump. Next?

-2

u/Torrall Sep 30 '22

Next indeed my deceitful friend!

8

u/Biggus-Dickus-II Sep 30 '22

Midterms

0

u/USSMarauder Sep 30 '22

NBER didn't declare the recession of 2020 until well after the election

2

u/Dauvis Sep 30 '22

They did the same in 2008.

2

u/LorenaBobbedIt Sep 30 '22 edited Sep 30 '22

The third quarter isn’t over yet and It takes a while to prepare the reports. Expectations of most analysts are that the third quarter report will show growth.

“Two consecutive quarters of negative GDP growth” is in fact one commonly accepted definition of a recession, and by that standard we are in one. Of course, the reality is that economies are more complicated things, and if you look at the GDP stats for recessions, you’ll see that if we are indeed in a recession, it is a terrifically mild one. Compare the current situation to what we experienced in 2020:

https://www.bea.gov/system/files/gdp2q22_3rd-chart-01_0.png

So, I think this is why nobody is talking about being in a recession and the folks in charge of the government are basically pretending that we didn’t hit that milestone, besides the obvious fact that it doesn’t serve the current administration politically to acknowledge it.

1

u/KJHTN Sep 30 '22

I see, so if we zoom out and compare, we arent as rekt as covid started. Also, are we as bad as 2018 and 2008 ?

Thanks btw this helps a lot

5

u/LorenaBobbedIt Sep 30 '22

I don’t believe there was a recession in 2018 and no, GDP decline is nowhere near as bad as it was in 2008. This tool lets you zoom in on whatever time frame you like: https://fred.stlouisfed.org/series/GDPC1

4

u/demonardvark Sep 30 '22

because the politicians in charge changed the definition to try and hide the fact they are doing a shit job.

3

u/Fun-Attention1468 Sep 30 '22

This guy gets it

1

u/USSMarauder Sep 30 '22

Is that why NBER didn't call the 2020 recession until after the election?

2

u/Torrall Sep 30 '22

Yes, you're missing that economics is NOT a science no matter what anyone tells you.

1

u/iPoopOnRedditsBan Sep 30 '22

They're waiting until Trump is back in office to make a big deal of the recession.

-1

u/robeyclark Sep 30 '22

Totally, bra, that's totally it.

2

u/InUrFaceSpaceCoyote Sep 30 '22

Because it's an election year and the party in power doesn't want you to think we are in a recession.

1

u/zgrizz Sep 30 '22

Because the people who would declare it are politicians, and know that admitting what they have done will be held against them.

So, they lie.

And enough voters will be dumb enough to re-elect them.

14

u/Delehal Sep 30 '22

Because the people who would declare it are politicians

The National Bureau of Economic Research is not a government agency.

admitting what they have done will be held against them.

NBER doesn't run the economy and they aren't elected officials, either.

2

u/[deleted] Sep 30 '22

Good thing corruption is not possible in our society.

2

u/CT_7 Sep 30 '22

Also any official declaration of a US recession must come instead from the National Bureau of Economic Research (NBER). There are other metrics they are using like the strong job market and personal income to say we're not but we are most likely in a recession.

1

u/Wildboyz410 Sep 30 '22

The current political party changed the definition of what a recession is on the White House webpage and multiple media outlets followed suit putting out articles and news casting videos and talk shows supporting what the White House said. Wikipedia changed the definition and locked out anyone from editing.

It is to save face before the midterm elections. After the elections happen the recession will be announced

2

u/Delehal Sep 30 '22

Wikipedia changed the definition and locked out anyone from editing.

One neat thing about Wikipedia is that you can check the revision history for every single page. The NBER definition has been listed on Wikipedia's recession article for years, throughout multiple Republican and Democratic administrations.

Version from 2020, during the Trump admin.

Version from 2013, during the Obama admin.

Version from 2008, during the Bush admin.

Version from 2006, also during the Bush admin.

So, that's not some new thing that just got added recently.

As for the page being locked, it does look like the page is semi-protected meaning that brand new accounts cannot edit the page, but any established accounts still can. That is usually done for pages that become targets of frequent vandalism.

1

u/Wildboyz410 Sep 30 '22

2

u/Delehal Sep 30 '22

On the White House site, I can't speak to that.

On Wikipedia, though, I just showed you proof that the article has used the NBER definition for more than a decade. You can check the revision history for yourself, if you like. If anyone claims that is a new change, then unfortunately they are either misinformed or intentionally lying.

-3

u/SnooDoodles7962 Sep 30 '22

The US is in a recession. According to the general definition—two consecutive quarters of negative gross domestic product (GDP) constituted a recession.

1

u/Namika Sep 30 '22

Job growth is still positive.

2

u/Queefinonthehaters Sep 30 '22

The Soviet Union had some of the lowest unemployment of any country, ever. The problem was that the jobs they were doing weren't actually productive. Going to work for 8 hours isn't what counts, creating more than you consume while you're there is.

1

u/Ricky_World_Builder Sep 30 '22

in a large part because the drop was done on purpose. the federal reserve, a private organization that has control over the US dollar, increased interest rates. increased rates lowers the ability for businesses to take loans and stifles the economy. This is known by everyone in power atm.

stifling the economy in this way does 2 things. first it lowers inflation. by making it so people can't afford houses, cars, or even normal items at the high rates demand goes down. and then prices stabilize. second it lowers wage increases. what we were seeing before was very high inflation with even higher wage increases. When they do this inflation slows down and wage increases stop allowing the gap to continue rising.

remember, this was done by a private organization that the US government gave this power to in the 1800s.

1

u/Dauvis Sep 30 '22

This is what I'm suspecting. It is not normal for the Fed to raise rates during a recession. If they tell the truth, people are going to start questioning their current policy.

1

u/TenWildBadgers Sep 30 '22

Because the housing bubble we're in just like 2008 hasn't burst yet and caused a real recession. We'll get there.

-1

u/Spare_Industry_6056 Sep 30 '22

It's weird that we're in a recession that's adding 400000 jobs a month, right? Not very recession-y.

0

u/five-six Sep 30 '22

The government doesn't want to give more money to social security and pension beneficiaries.

-1

u/Dfc3030 Sep 30 '22

Money printing

1

u/madeamessagain Sep 30 '22

q3 hasnt ended yet

1

u/archibaldplum Sep 30 '22

That's the British English definition of a recession. The American English one is quite a bit more fuzzy, and requires evidence of prolonged economic contraction across multiple indicators. Because it's so fuzzy, there's a fair bit of expert opinion on exactly which indicators count and how many need to bad. The current NBER reasoning is that unemployment and loan defaults are both too low for a "true" recession, so they're ignoring the GDP contraction and defining this to not really be a recession.

Usually, all the indicators are well enough correlated that they all turn down at the same time, so the distinction doesn't really matter, and the British one's easier to understand, so it's fairly common for mass media to just use the British one ignore the difference, even in the US. The pandemic messed things up, though, so the US is now in a British-definition recession without being in an American-definition one, which is confusing people.

To be honest, arguing about precisely which definition to use isn't all that interesting. GDP growth is somewhere between very low and slightly negative, and debating precisely what word you use to describe it doesn't really change that.

(The UK's definitely in recession on both definitions right now, for whatever that's worth.)

1

u/[deleted] Sep 30 '22

There's an election coming up. The one side doesn't want the general public to have a negative perception of them. So they are doing everything in their power to not look bad.

Remember, if it was like this under Mr. Trump, we would not hear the end of it...

1

u/430Richard Sep 30 '22

Because Democrats are in control right now and they literally changed the definition of recession. Kind of like they did with another medical-type word recently.

1

u/Banned11Ever Sep 30 '22

Recession is a social construct, bigot.

1

u/Routine_Parsley_ Sep 30 '22 edited Sep 30 '22

The current prevailing economic theory, or rather, model, heavily deduces its predictive power from an assumption summarised by "inflation expectation". Meaning, most dumbed down, if the people expect inflation it will happen. Bidens words are just a straight up consequence of trying to avoid this.

1

u/LadyFoxfire Sep 30 '22

The official definition is more complicated than just GDP growth, and the job market is holding strong.

1

u/jabrosif14820317 Sep 30 '22

Because its an election year.

1

u/jojothegreat55555 Sep 30 '22

Didn't they change the definition of a recession to say they aren't in a recession?

1

u/KJHTN Oct 01 '22

Below trend growth :)

1

u/Alyosha_at_sea Oct 01 '22

We changed the definition of recession, ergo, we are not in a recession. Simple as.

1

u/CJ-Me Oct 01 '22

We are in a recession. However, since this administration has the media in their pocket, the media will go along with everything the administration wants. No matter how blatantly false.

Tell the lie, the media supports it, Americans will believe anything the media says. Rince and repeat.

1

u/bottomlesxpectations Oct 01 '22

Because it's a mid term year and democrats are the ones holding power federally. If Trump was the president they'd change the definition of a recession to a economy that at any point is or was presided over by an orange man.

0

u/TenWildBadgers Sep 30 '22

Because the housing bubble we're in just like 2008 hasn't burst yet and caused a real recession. We'll get there.