U.S. economy just had a 2nd quarter of negative growth. Is it in a recession?

U.S. economy just had a 2nd quarter of negative growth. Is it in a recession?

Published July 28, 2022
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While two consecutive quarters of negative growth is often considered a recession, it’s not an official definition. A nonprofit, non-partisan organization called the National Bureau of Economic Research determines when the U.S. economy is in a recession. An NBER committee made up of eight economists makes that determination and many factors go into that calculation.

Treasury Secretary Janet Yellen noted in a recent appearance on NBC’s Meet the Press that while two consecutive quarters of negative growth is generally considered a recession, conditions in the economy are unique.

The GDP report showed that businesses had retrenched. Undoubtedly, borrowing has become more expensive with the Federal Reserve ratcheting up interest rates. So there’s less money to invest. The key worry is whether that will start hurting jobs growth.

Retailers had a glut of inventories to work through, so those businesses were also spending less. And housing, which has been running hot during the pandemic, is starting to cool with mortgage rates rising.