The S&P 500 is down nearly 15% year-to-date, the economy unexpectedly shrank last quarter, and financial experts say there is a 70% chance of a “near-term recession.” Investor sentiment has rarely been more negative than it is now; the Fear & Greed Index
The NBER defines recessions for the U.S. government, and they take factors other than a decline in GDP into account. However, two consecutive quarters of decline in GDP is the simple agreed-upon measure that most use. From the IMF: "Most commentators and analysts use, as a practical definition of recession, two consecutive quarters of decline in a country’s real (inflation-adjusted) gross domestic product (GDP)—the value of all goods and services a country produces."
The NBER isn't very transparent about how they determine if we're in a recession or if one occurred. From their website: "There is no fixed rule about what measures contribute information to the process or how they are weighted in our decisions." So for all we know their decisions could be based on just vibes, feels, whatever. There's a lot of value in having a simple widely-used quantitative definition of a recession rather than whatever a single organization decides based on factors not entirely disclosed to the public.
Doesn't NBER call recessions? I thought two quarters of negative GDP growth was just a rule of thumb.
The NBER defines recessions for the U.S. government, and they take factors other than a decline in GDP into account. However, two consecutive quarters of decline in GDP is the simple agreed-upon measure that most use. From the IMF: "Most commentators and analysts use, as a practical definition of recession, two consecutive quarters of decline in a country’s real (inflation-adjusted) gross domestic product (GDP)—the value of all goods and services a country produces."
The NBER isn't very transparent about how they determine if we're in a recession or if one occurred. From their website: "There is no fixed rule about what measures contribute information to the process or how they are weighted in our decisions." So for all we know their decisions could be based on just vibes, feels, whatever. There's a lot of value in having a simple widely-used quantitative definition of a recession rather than whatever a single organization decides based on factors not entirely disclosed to the public.