The United States is perilously close to falling into a recession, despite the reassurances of Federal Reserve officials, Wall Street economists and financial journalists. That’s not just an idle opinion; it’s what the data say. Let’s let the numbers speak for themselves.
‘A deep, widespread, and lasting downturn’ Contrary to what you’ve heard, a recession — at least in the U.S. — is not defined by two straight quarters of falling gross domestic product (GDP). It’s more nuanced than that. Also read: A ‘fake’ recession? The U.S. economy is in decent shape for now despite weak GDP According to the National Bureau of Economic Research, a private body that’s been accepted as the official historian of U.S. business cycles, “a recession involves a significant decline in economic activity that is spread across the economy and lasts more than a few months.” The key elements are depth, diffusion and duration. The decline in GDP in the first quarter would not meet the criteria, because the weakness was not widespread; it was confined to one part of the economy — the trade deficit — while the rest of the economy grew at a healthy rate. Indeed, imports were high precisely because domestic demand was strong. And an expected decline in the just-concluded second quarter — we’ll find out next week when the data are released — might not meet the diffusion criteria either, because most of the apparent weakness was in home building and inventory growth, not in consumer spending or business output. In practice, the NBER looks primarily at six coincident ind …