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In June 2023, I said that there would be no recession in 2023. The recent data shows that the GDP grew in the 4th quarter at 3.3 percent annualised rate.
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June 2023
Prophets of Doom proven wrong.
*The first half of 2023 will come to a close on Friday. And when it does, one of Wall Street’s big predictions for 2023 will officially be a bust — the stock market did not fall and the US economy did not enter recession.
https://weehingthong.org/2023/06/28/hitting-reset-on-the-us-recession-countdown/
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The US economy is not in a recession. The last recessions were in early 2022 (3/2022 and 6/2022), and before that, early 2020 (3/2020 and 6/2020).
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There is no single definition of recession, though different descriptions of recession have common features involving economic output and labour market outcomes.
The most common definition of recession used in the media is a ‘technical recession’ in which there have been two consecutive quarters of negative growth in real GDP. This definition often appears in textbooks and is widely used by journalists.
https://www.rba.gov.au/education/resources/explainers/recession.html
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Recession outlook: Economic decline unlikely after hot May jobs report
Insider
A recession is unlikely to hit the US economy in the next 12 months after Friday’s hot jobs report
Jun 5, 2023, 10:25 PM MYT
- The odds of a recession in the next 12 months fell considerably after May’s strong jobs report, DataTrek Research said.
- The May report showed that 339,000 jobs were added to the economy last month, well ahead of economist estimates.
- “History does support the idea that May’s job growth pushes back the start of a US recession by at least 6 to 12 months,” DataTrek said.
The US economy is unlikely to fall into a recession in the next six to 12 months following the Friday release of May’s solid jobs report, according to a Monday note from DataTrek Research.
The May employment report showed that 339,000 jobs were added to the economy last month, well ahead of economist estimates of 195,000.
The strong jobs number, combined with no signs of incremental wage pressure and a slight increase in the unemployment rate, represented a goldilocks report for investors because it signaled that despite the solid jobs growth, the Fed could still hit the pause button on further rate hikes at its policy meeting next week.
The S&P 500 surged 1.5% on Friday while the Dow Jones Industrial Average surged 2% in reaction to the jobs report.
“The US labor market remains strong,” DataTrek Research co-founder Nicholas Colas said, and that strength pushes off the likelihood of a recession that so many Wall Street strategists and business CEOs have been warning about in recent months.
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“History does support the idea that May’s job growth pushed back the start of a US recession by at least six to 12 months. In no case since 1980 has the US economy slipped into a recession any sooner than that after a jobs report similar to what we got on Friday,” Colas said.
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Benjamin Curry Editor
For almost a year now, politicians, economists and financial professionals have been engaged in a great semantic debate over whether the U.S. economy is headed for recession or not.
One common definition of recession—two consecutive quarters of negative gross domestic product (GDP)—happened in the first half of 2022. Yet the organization that defines U.S. business cycles, the National Bureau of Economic Research (NBER), takes a different view.
According to the NBER’s definition of recession—a significant decline in economic activity that is spread across the economy and that lasts more than a few months—we were not in a recession in 2022 and we still aren’t now.
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To keep tabs on whether an official economic contraction is imminent, we’ve devised the following recession tracker, which monitors 15 important economic indicators. Once most of the signs point downward, a recession may very well be nigh.
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What Is the Recession Tracker Telling Us?
The 15 data points in the Forbes Advisor recession tracker had the following grades:
- Good: 3
- Neutral: 4
- Bad: 8
As the months go on, it appears that more and more of our data points are drifting into neutral territory rather than remaining positive. This could mean the U.S. is drifting closer toward a recession as well.
Keep in mind, however, that not every data point we rank above would be weighted equally in deciding whether the U.S. is in recession. If GDP can continue growing—which experts seem to believe is unlikely—while inflation moderates, we may be able to avoid a recession and come in for what the Fed has referred to as a “soft landing.”
However, with the recent stress on the banking system and how that’s likely to influence Fed rate hikes, the economy appears to be weakening overall. Even the U.S. unemployment rate, which figures heavily into when a recession might be called, is starting to weaken.
The U.S. may not be in a recession yet, but things aren’t looking good.
Read this long article here:
https://www.forbes.com/advisor/investing/are-we-in-a-recession/
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Will There Be A Recession In 2023—And How Long Will It Last?
Q.ai – Powering a Personal Wealth Movement
Contributor
Making wealth creation easy, accessible and transparent.
Key takeaways
- Most economists believe that a recession is likely in 2023
- Recessions are a regular part of a healthy economy and their length varies
- Calling the start and end of a recession is tricky due to the various moving parts of the economy
As soon as economists saw that inflation was not transitory but longer-lasting, they began considering the potential for a recession. With higher prices persisting even after the Federal Reserve raised interest rates, the expectation for a recession only mounted.
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A recession is defined as a slowdown in economic activity that’s spread across all sectors of the economy and lasts for a significant period. It can be preceded by inflation, but not always. Many economists and financial experts are confident a recession will happen in 2023, but some, like Jamie Dimon, CEO of JP Morgan, are pushing predictions for a recession toward the end of 2023, feeling they might have overestimated the severity of and potential for a slowdown in the economy. Still, other economists see a 1960s-style recession in the near future.
In contrast, the Federal Reserve still feels the economy is too strong and would prefer the employment rate to slow down or decline. The Fed is looking to create a soft landing for the economy, hoping to avoid what happened in 2008.
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Important economic indicators to watch
As previously mentioned, there are multiple economic indicators to watch to assess whether we’re in a recession. While they are usually reliable indicators and can demonstrate slowdowns across all sectors of the economy, they’re not always definitive. The NBER looks at multiple factors before calling a recession. For the layperson, the following economic indicators help predict the near future of certain industries and represent changes in different areas of the economy. The indicators include:
- Gross domestic product (GDP)
- Consumer Price Index (CPI)
- Producer Price Index (PPI)
- Non-farm payrolls
- Unemployment rate
- Consumer Confidence and Consumer Sentiment
- Durable goods orders
- Retail sales
If all of these indicators show negative numbers, it can be assumed that the economy is in a recession. There may be no official statement from the NBER because it takes time for a recession to become visible. However, the general public can use these indicators to determine if the current state of the economy has turned negative.
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The bottom line
Signs point to a recession in 2023, not just in the U.S. but globally, though many experts remain hopeful it will not be too severe. This is good news for everyone, as it could mean fewer people lose their jobs, and household financial impacts will be mild.
As an investor trying to take advantage of a rising stock market while also being cautious of the potential danger of a recession, look no further than the Inflation Protection Kit from Q.ai. The Kits offered by Q.ai use artificial intelligence to spot trends and invest accordingly.
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US GDP by quarter (December 2010 – March 2023)
https://ycharts.com/indicators/us_real_gdp_growth
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