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Are we in a recession right now?  What factors influence your opinion on this?

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yemawe52 | (Level 2) Honors

Posted May 27, 2013 at 6:36 AM via web

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Are we in a recession right now?  What factors influence your opinion on this?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted May 27, 2013 at 1:31 PM (Answer #1)

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Technically, this is not an issue of opinion.  We are either in a recession or not, and we are not in a recession right now.

A recession occurs when real Gross Domestic Product (real GDP or RGDP), goes down for two quarters in a row.  An economy can only be in recession if this has happened.  In the most recent quarter, the US’s real GDP went up.  It did not go up by a lot, but it did go up.  Therefore, it is not possible that we are actually in a recession.

Now, it is possible that real GDP will go down in this quarter.  If it does, and if it then goes down next quarter as well, we will be in a recession.  However, this does not appear to be the case.  For example, the latest unemployment numbers indicate that unemployment is dropping.  It is dropping slowly, but it is dropping.  In addition, leading economic indicators (these are statistics that are generally associated with how the economy will perform in the near future) are rising.  It appears that we will continue to have growth, even if the growth is not strong.

Thus, we are not in a recession and it does not appear that we will enter one soon.

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