Recession Model Update (August 2022)
"Whose recession is it anyway?"
Clash of the Definitions
The latest negative real GDP print has re-ignited the debate over what defines a recession:
The “negative real GDP” definition: two consecutive quarters of negative quarter-over-quarter real GDP.
The NBER definition: “a significant decline in economic activity that is spread across the economy and lasts more than a few months” (more info)
While people argue about which definition is “better”, I haven’t seen many side-by-side comparisons of their track records. So here you go:
I was particularly surprised that the “negative real GDP” definition missed the early 2000s recession:
Takeaway
The “negative real GDP” definition has actually called for fewer recessions than NBER, but so far every “negative real GDP” recession has been associated with an NBER recession.
So if NBER doesn’t call a recession now that the “negative real GDP” criteria has triggered, it would be quite an (*ahem*) unprecedented situation.
Current Values (as of August 8, 2022)
Until Next Time
Terrence | terrencez.com
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