For the second consecutive quarter the gross domestic product, GDP, fell, the Commerce Department said Thursday.
The decline meant the US economy met one common, though unofficial, definition of a recession.
“If you pick up an Intro to Economics textbook it will probably tell you that two quarters of a falling GDP means a it’s a recession,” said FGCU Economics Professor Dr. Victor Claar.
However, as Claar points out, it’s not that simple.
“We’re producing less stuff. We’re selling less stuff. And people are earning less. At the same time, the jobs numbers are relatively strong,” Claar said.
The National Bureau of Economic Research makes the official determination of whether or not the US economy is in recession.
Thursday, President Joe Biden insisted the US is not in a recession, pointing to strong jobs numbers.
“Coming off of last year’s historic economic growth, and regaining all the private sector jobs lost during the pandemic crisis, it’s no surprise that the economy is slowing down as the Federal Reserve acts to bring down inflation,” the President said in a statement.
“But even as we face historic global challenges, we are on the right path and we will come through this transition stronger and more secure.”
Whether or not the country is officially in a recession may mean little to families struggling with inflation.
“For a lot of people, if they feel like their livelihood is not as secure as it was a year or two ago then for them they feel like it’s a recession,” Claar said.
The NBER doesn’t have regularly scheduled meetings.
Meaning it could be weeks, possibly even months before we have an official designation.
The country’s last recession lasted only two months at the beginning of the COVID-19 pandemic in early 2020.
Job numbers and recessions don’t always go hand-in-hand.
For instance, the NBER says the Great Recession ended in June of 2009, meanwhile unemployment peaked in November of that year.
Earlier this week, the Federal Reserve announced plans for another interest rate hike to curb inflation.
Claar worries it might be too little too late.
“The Fed probably waited too long to take inflation really seriously,” said Claar. “And when they finally did take it seriously they probably raised interest rates too slowly and not enough to really step on the brakes and stop this overheating economy where prices are concerned.”