Everyone knows recessions hurt. But what exactly are they This is a difficult but important question that could arise in the coming weeks for America due to the oddly lopsided state of its economy.. A popular definition of a recession, often cited by journalists, is two consecutive economic quarters of negative growth.. Based on this, America today is on the verge of one of them.. The economy contracted slightly in the first quarter of 2022. Some indicators, such as a decline in residential construction and industrial production, suggest that a slight decline may have taken place in the second quarter. If this is the case when the state of GDP is announced on July 28, the conclusion seems clear: America is in recession, writes The Economist..

But it's not that easy. Officially, the decision on whether the US economy is in recession belongs to the National Bureau of Economic Research (NBER) Business Cycle Dating Committee, a private non-partisan research organization.. This is a group of eight macroeconomists, including Robert Gordon of Northwestern University and Christina Romer of the University of California at Berkeley.. They look at a number of variables beyond GDP itself, from consumption to industrial production, with the goal of identifying recessions that are truly economy-wide..

This analysis has sometimes led them to claim that the economy is in recession even when GDP is growing.. America managed to avoid two consecutive quarters of negative growth in 2001, but enthusiastic scientists still considered it a recession.. What makes the present moment so unusual is that the public, for the first time, may come to the opposite conclusion: the economy has avoided a recession despite persistently negative growth..

Some skeptics may see this as a political conspiracy - say, an attempt to prop up the beleaguered presidency of Joe Biden.. In fact, the argument is much more banal. In determining business cycles in recent decades, the group has focused most on real personal income and employment rates, both of which so far perform better than GDP growth.. Real (inflation-adjusted) incomes have indeed begun to fall as rising prices eat into wages. But job growth remains surprisingly strong. The economy created 372,000 jobs in June, pushing private sector wage bills above pre-crisis levels. This rebound from the pandemic was the fastest recovery in America's labor market in more than three decades.. The unemployment rate, which is stable at around 3.6%, just short of a seventy-year low, simply doesn't fit the notion that the economy is in recession.. One possibility is that future data revisions will show that GDP did increase in the first half of 2022..

All of this could be cold comfort to Biden.. For voters, what matters most is not the technical assessment of the recession, but their overall perception of the economy. And she's pretty skimpy. Consumer sentiment plummets, according to polls. A survey conducted by YouGov and The Economist in June found that 56% of Americans believe the economy is already in recession.. It's no coincidence that Biden's approval ratings have also fallen, making him even more unpopular than Donald Trump at this point in his presidency.. Hyperpartisanship largely explains antipathy. High inflation is also an important factor that reduces Americans' ability to afford certain goods and makes them feel poorer..

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Some are also afraid of what might be waiting for them around the corner.. With inflation so resilient (and now at a 40-year high), the Fed has embarked on a course of monetary tightening that looks destined to be the sharpest it has been since the early 1980s.. Rising interest rates do not always precede a recession. But it will be a small miracle if America can sustain such a massive tightening without a significant rise in unemployment.. At least one group can count on job security: the G8, which should define peaks and troughs in business cycles. Their experience in this will be in demand.

Earlier it was reported that the NBU published business expectations of the business regarding the possible level of inflation and the hryvnia exchange rate for the next 12 months.