While I was (responsibly) sipping daytime micheladas last week, the interwebs exploded with a heated and mostly partisan debate about whether—after the latest real (inflation-adjusted) gross domestic product figures showed a second consecutive quarterly decline—the country is now in a “recession.”
For Team Recession (primarily manned by the Republican/right), the argument was that two straight quarters of GDP contraction is, while imperfect, the longstanding shorthand for determining a recession—one that Democrats themselves have often used before doing so became politically uncomfortable. On the other hand, Team Not Recession (featuring mostly Democrats/lefties) countered that the “official definition” of a recession—traditionally assessed by Business Cycle Dating Committee of the academic National Bureau of Economic Research (NBER)—uses a wide range of economic data, including several indicators (most notably employment) that continue to show robust expansion. Both teams then yelled at each other for days; the White House held a big press conference; and folks even started fighting over the Wikipedia entry and related “fact-checks”—as American political debates so often do these days (sigh).
That debate is, as we’ll discuss, honestly pretty silly. But it does offer a good opportunity to talk about recessions, the GDP calculation, the current state of the U.S. economy, and what policymakers should be focusing on right now.