Based on historical trends, it is likely that the United States is heading into a recession or is currently in one. A common sign that a recession occurred or is occurring is marked by two consecutive quarters of negative GDP growth. Today, the Bureau of Economic Analysis has just released its data for the last quarter showing that the United States had another quarter of negative GDP growth. This means that the United States produced less now than it did 6 months ago.
Of course, two negative quarters is not the only indicator of a recession and it would not be official until the non-profit group called the National Bureau of Economic Research (NBER) declares it. However, this wouldn’t be officially declared until after all data has been collected, which takes a considerable amount of time; in other words they wouldn’t declare we are in a recession until after the recession had probably ended.
Another indicator that we may be going into another recession is that the Federal Reserve once again raised interest rates at unprecedented levels – another 0.75 percentage point increase! This increase is meant to curb the still high inflation but will also in effect slow the economy down worsening the recession.
Recessions typically occur once every ten years and last around 11 months meaning that we are likely to pull out of this one around November, assuming it started around January-February. Although since the last recession would have been the COVID-induced lockdown in 2020, having another one only two years later would be bizarre if going off of historical trends.
Meanwhile, President Biden is arguing that we cant be going into a recession when you look at record low unemployment rate and high foreign investment. It is true that a 3.6% unemployment rate and a high job creation is unusual with a recession. A recession is normally characterized by large scale layoffs and high unemployment something, that does not appear to be clearly occurring with 327,000 jobs created in the US just last month. An issue with these numbers is that the amount of jobs created doesn’t say whether they are good jobs that people want or not.
Ironically, the economy is somewhat a self-fulfilling prophecy. If the public believes a recession is likely to occur, they are likely to spend less and companies won’t produce as much, something that would lower GDP and cause the recession in the first place. Time will tell whether or not this truly is a recession however if it is, the good news will be that we are already most of the way out of it.
This blog post is part of the CIMA Law Group blog. If you are located in Arizona and are seeking legal services, CIMA Law Group specializes in Immigration Law, Criminal Defense, Personal Injury, and Government Relations.
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