WASHINGTON, DC, July 6 — No, the Business Cycle Dating Committee does not provide dates for corporate executives. It’s a group composed of economists at the National Bureau of Economic Research [NBER] that tracks business cycles. And they are the folks who determine whether or not our economy is in recession.
Recession is a period of economic deterioration. You know you are in a recession when you find yourself paying two or three times more for things like gasoline, groceries and other household commodities. What causes a recession? This time around, it is caused by President Biden’s war on fossil fuels coupled with wasteful spending on the part of government. He and his Democratic party, which is in control of Congress, are responsible for the runaway spending schemes that fueled runaway inflation that, in turn, has led us to the brink of a new recession.
According to Brendan Cole, a senior journalist at Newsweek, “The committee, which has the sole authority to declare the start and the end of a recession, takes into account aspects such as consumer spending, industrial production, employment and real personal income levels.” Cole cites economist Peter Schiff who recently tweeted, “Joe Biden will soon be forced to admit that America’s red hot economy has actually been in a recession all year, which will only get far worse with high inflation and more rate hikes.”
Unofficially, a recession is usually declared when the economy has two consecutive quarters of negative growth. We experienced a 1.3% negative Gross Domestic Product [GDP] in the first quarter this year. We won’t have an official reading of the second quarter GDP until July 28. However, the Atlanta Federal Reserve Bank is currently estimating that the seasonally adjusted annual rate of GDP growth, in the second quarter of 2022 is minus-2.1% on July 1, down from minus-1.0% on June 30.”
Even the left-leaning Economic Policy Institute reports that “recessions result in higher unemployment, lower wages and incomes, and lost opportunities more generally. Education, private capital investments, and economic opportunity are all likely to suffer in the current downturn, and the effects will be long-lived. While economies often see rapid growth during recovery periods (as unused capacity is returned to work), the drag due to the long-term damage will still prevent the recovery from reaching its full potential.”
The NBER says that the U.S. has experienced 34 periods of recession in the 19th and 20th centuries and that so far in the 21st century there have been three. The first occurred in the period from March 2001 to November 2001, the second was from December 2007 to June 2009 and in 2020 at the start of the COVID pandemic between February and April of that year.
As far-fetched it may sound, there are a few beneficial things about a period of recession. For example, Motley fool’s Dana George points out that “Nearly all of us will be impacted by a recession in some way. During times of economic downturns, Americans are reminded of how important it is to live below our means (or at the very least, within our means). It prods us to save for the next rainy day, keep our emergency funds topped up, and to reevaluate how we manage money…People save more during recessions. That does not help economic recovery but given that only one-fifth of Americans are confident they can last more than three paychecks, a lot of people would benefit from saving more.”
So, when will the Business Cycle Dating Committee officially declare that we are in recession? The New York Times says it will likely be “well after the slump has already begun. Recessions come in all shapes and sizes. Some are long, some are short. Some create lasting damage, while some are quickly forgotten.”