It's the million dollar question: Is the US in a recession? The answer may not be as cut and dry as you think it is.
Prevailing inflation and a series of extenuating mitigating factors stemming from both domestic and international sources have led many to determine that the United States is teetering on entering into a full-blown recession. In fact, judging by the state of the housing market as well as the effects inflation is starting to have on consumer spending, some might even think a recession is already here. The thing is however, there are other factors when taken into consideration that paint the opposite picture. So which is it? Is the United States in a recession or not?
By the technical markers, the United States is not considered to be in a recession just yet. The New York Times pointed out that a recession is defined as a period of steep economic decline across all types of industries and market sectors. This is not consistent with the economic performance of the United States at present. For example, while housing and certain areas of consumer spending have slowed as a result of historically increasing inflation rates, other industries have remained robust and fruitful.
For instance, the travel industry is booming. In fact, the number of people traveling has been so high that airlines are having serious trouble fielding the uptick. Additionally, unemployment rates are still sitting at historic lows. And even though hiring has slowed, particularly in the tech industry, companies are still hiring. Those are things that are in no way synonymous with a recession. “…[W]hen you look at factors like jobs, where we’re still creating three to four hundred thousand jobs a month, with an unemployment rate that has not begun to show signs of sustained increases,” highlighted Ellen Zentner, chief US economist for Morgan Stanley.
Moreover, markets are not behaving as they historically would. Consequently, perhaps, curtailing a recession. This is because of a circumstance that was never present in modern history – a pandemic. The pandemic served as a catalyst to change the way society and the economy are behaving at present. Consumer resiliency is up and people are still spending in certain areas despite inflation-related challenges that have arisen. Even the Federal Reserve has expressed confusion over why their tried and true inflation-combatting tactics are seemingly having little effect in deflating an unnaturally bloated economy.
That being said, just because the economy isn’t behaving as it historically would doesn’t mean that a recession is out of the question. Jeffrey Frankel, a Harvard economist, said to The New York Times that last month he wrote that a recession occurring was “very unlikely.” Subsequently, he has revised his thinking. “If I had to write that now, I would take out the ‘very,’” relayed Frankel. Other economic experts are a bit more pessimistic in their outlooks. Joel Prakken, chief US economist for S&P Global Market Intelligence, for instance, thinks that the United States is at a “high risk” of entering into a recession.
Ultimately, the verdict right now regarding whether a recession will occur is that there is still no verdict. The jury is still out. Even the economists can’t agree. The one thing that is certain, however, is that the US is not in a recession just yet. And as long as certain economic indicators remain robust, it’s likely to stay that way.