A Recession Or Not?
A reader writes:
If you define a recession as two consecutive quarters of real GDP declines (as most do), you have to look at what the government uses as their number for inflation. For the past two quarters, the government has used an inflation number that is in the mid-2% range. If you used a number that actually reflected inflation (the government's official inflation number has been adjusted numerous times since the 1970s), real GDP would have been negative for both quarters.
I learned in ECON 101 back in 1979 that it constituted back to back negative growth quarters and to be determined by some panel many months or years into the future. So the actual meaning has no real life application. Further, the definition itself is rather arbitrary and archaic in modern times due to rapid fluctuations. In my view, economic conditions should not be constrained by arbitrary dates, if the economy is not growing, then it is a recession; and I would add that if the economy is not growing in pace with population growth then we have what many economists call a growth recession since the per capita GDP is contracting.