When Is It A Recession? Depends On Who's Asking
The Muddy Waters Of Economic Classifications
With what has to be among the most tone-deaf moments of pedantic purity in recent history, Treasury Secretary managed to give quite a few media commentators and analysts a serious case of whiplash with her earnest insistence that the economy is not in recession after all.
Treasury Secretary Janet Yellen said Sunday that growing consumer spending, industrial output, credit quality and other economic indicators don’t suggest the economy is in a recession, although she acknowledged that “way too high” inflation is straining the system.
“This is not an economy that is in recession,” Yellen told moderator Chuck Todd on NBC’s “Meet the Press.”
Yes, she really did say that—and yes, she really did mean it. Yes, she really does believe that.
How on earth can she possibly believe that? As with so many things in economics, the start and end of a recession depends largely on what metrics you choose to use for the definition. Janet Yellen is simply using a different set of metrics and not the longstanding rule of two successive quarters of declining GDP.
Unfortunately for her, even by her alternate metrics, the economy is still in recession.
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