Best New Ideas in Money: So, are we in a recession or what?

by | Aug 12, 2022 | Stock Market

There’s been a lot of news about inflation lately, especially about whether we are entering a recession or whether we’re already in one. Although the conventional definition of a recession is two consecutive negative quarters of real GDP, there is no consensus among economists — and everyone else, for that matter — that we’re in a recession already.

“There are some very good economists out there who are arguing that the U.S. may well have entered a recession in the last part of 2021 or the early part of 2022,” co-host and economist Stephanie Kelton said on this week’s Best New Ideas in Money podcast. But we won’t know for sure whether we’re in a recession until the National Bureau of Economic Research tells us so officially. And even then, Kelton said the committee’s official declaration could very well come a year or more after the recession officially started.  “There are fierce disagreements among economists about all of this; on the one hand, some people say, it’s obvious that we’re sliding into recession, and what in the world are the rest of you missing?,” Kelton said on the podcast. “But then others will say, how can you be so quick to jump to conclusions? Look how many jobs we’re creating, and look how low the unemployment is.” One indicator, notably not a predictor, of recession is the Sahm Rule, named after former Federal Reserve economist Claudia Sahm. Basically, when the unemployment rate rises by a certain percentage above the low of the prior year, it indicates the economy has entered recession …

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