Opinion: We Are Already (Technically) in a Recession

Daniella Cressman

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Disclaimer: This article is accurate and true to the best of my knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

According to a real-time data tracker used by a key federal reserve bank, we're already in a recession.

A lot of us have already been struggling to pay for groceries, rent, and gas, but it looks we could be in for even more economic hardship: both Elon Musk and ARK Invest's Cathie Wood have claimed that we are already in a recession, after all.

"In May, Elon Musk said the U.S. was “probably” in a recession that could last up to 18 months, and argued it’ll be 'tough going' for many. Then, just this Tuesday, ARK Invest’s Cathie Wood said she agrees with the Tesla CEO and world’s richest man, pointing to rising inventories at retailers as a sign of growing economic weakness." —Will Daniel

Of course, this depends on how you define a recession.

WHAT IS A RECESSION?

Musk and Wood are referring to the technical definition of a recession:

"Musk and Wood’s arguments are based on the widely accepted technical definition of a recession, which involves a period of two consecutive quarters of gross domestic product (GDP) contraction." —Will Daniel

If the Federal Reserve Bank of Atlanta's prediction is correct, we are—technically—already in a recession.

"The Federal Reserve Bank of Atlanta’s GDPNow tracker now predicts that second-quarter GDP will contract by 1%. That’s quite the dip from the tracker’s early June prediction for an increase of 1.3% in the second quarter. If the Atlanta Fed’s pessimistic outlook is correct, coupled with the 1.6% decline in GDP seen in the first quarter, it would mean two consecutive quarters of a shrinking economy, and therefore a recession." —Will Daniel

That being said, the National Bureau of Economic Research—which is considered the official judge of business cycles— has a slightly different view on what constitutes a recession.

"Of course, what determines a recession is not quite as airtight as just two consecutive down quarters. The National Bureau of Economic Research, which is often seen as the official judge of business cycles, defines a recession as 'a significant decline in economic activity that is spread across the economy and that lasts more than a few months.'" —Will Daniel

Nonetheless, Bill Adams, the chief economist for Comerica Bank, thinks we might just be in a bit of an economic slump.

“It’s increasingly likely that U.S. real GDP contracted for two consecutive quarters in the first half of 2022. But unless the U.S. starts to see outright job losses, this period looks more like a slump than an outright recession..." —Bill Adams

A recession can signal significant losses or significant gains in the future depending on how you manage your finances during this time: keep or build an emergency fund, hold your investments or buy stocks at lower prices, and minimize your expenses as much as possible.

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Canadian-American author writing about local politics, personal finance, & dining in Albuquerque.

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