COLORADO SPRINGS — The U.S. Gross Domestic Product (GDP) has gone down for two consecutive quarters, but Tatiana Bailey explains why we are not officially in a recession.
As Bailey explains the GDP is all of our goods and services produced in the United States. The GDP for quarter two declined by 0.9%, which follows a decline of 1.6% from quarter one. A recession is defined as two consecutive quarters of GDP declines and the U.S. is technically in a recession. However the National Bureau of Economic Research (NBER) a non-partisan think tank makes the official declaration.
Bailey says that most experts don’t think the NBER will declare a recession because they look at many data points other than GDP, importantly the labor market. The unemployment rate in June was 3.8% even lower for Colorado, the unemployment rate is usually around 4% to 4.5% so the country is currently under its usual rate.
The economy has been adding 400,000 jobs a month during the last several months. There has been a slowing in job openings recently but still elevated labor demand with 10.7 million openings. Manufacturing remains strong which does not indicate a recession.
However, Bailey says credit card usage and delinquency rates have increased and the Organization of Petroleum Exporting Countries (OPEC) has announced lower production levels, leading to high energy prices.
The data is mixed and according to Bailey whether or not the U.S. is in a recession is a moot point, the GDP has declined for six months and the economy hasn’t been growing.
“I think it would be better to focus on the longer-term structural issues and how we can innovate our way out of them in things like food or energy production,” said Bailey. “That way we can ensure sustainable long-term growth and also lead by example.”