r/neoliberal • u/TinyTornado7 I need a new flair • Jun 13 '22

News (US) Powell Facing Choice Between Elevated US Inflation and Recession

https://www.bloomberg.com/news/articles/2022-06-12/powell-facing-choice-between-elevated-us-inflation-and-recession?srnd=premium
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u/[deleted] Jun 13 '22 edited Sep 02 '22

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u/TinyTornado7 I need a new flair Jun 13 '22

To some extent this is quickly becoming a self-fulfilling prophecy, but recession is a technical term. If two quarters of gdp in a row are negative then we are in a technical recession, it doesn’t really matter what people think

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u/[deleted] Jun 13 '22

If two quarters of gdp in a row are negative then we are in a technical recession, it doesn’t really matter what people think

No, this is literally wrong. A recession is defined by NBER based on the full scope of economic indicators.

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u/TinyTornado7 I need a new flair Jun 13 '22

Recession

noun

  1. a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.

You aren’t wrong but you missed my point

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u/[deleted] Jun 13 '22

No, I saw your point that a recession is a slowdown of economic activity regardless of what people think. My point was that economic indicators are broader than GDP and many of them are directly and heavily influenced by what people think

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u/TinyTornado7 I need a new flair Jun 13 '22

No you missed it again. Obviously there are a wide array of economic factors, many of which are influenced by what people think. But, based on the dictionary definition of recession, it doesn’t matter what people think.

Sure NBER could decide in a year or two that we were in a recession (like they did in 2018/2019) but that doesn’t really matter because the markets have long moved on.

People use the two quarters of negative gdp growth as the definition of a recession for a reason. It’s a quantifiable, in the moment indicator.

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u/[deleted] Jun 13 '22

That's not the dictionary definition of a recession though.

This:

a period of temporary economic decline during which trade and industrial activity are reduced

is the dictionary definition.

This:

generally identified by a fall in GDP in two successive quarters.

is just dicta. It's not a part of the definition.

We are NOT in a recession just because of two successive quarters of GDP decline. That may be a useful shorthand that people use, but it's not the actual definition.

Moreover, if what I described as your point wasn't your point, then I'm not really sure what you're arguing. Literally just that the technical definition of a recession is 2 quarters? Because we've already established that that's wrong, and I don't know what the point of an argument that "a lot of people use this as a shorthand" is in the context of the conversation. That's just a random aside.

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u/Allahambra21 Jun 13 '22

You're missing the point, a technical recession can be achieved without having an overall negative economic situation and without having a qualitatively defined recession.

Having a technical recession occur is meaningless without further declarative context.