What actually IS a recession?

The US economy shrunk in the spring for the second consecutive quarter (-0.9%), according to data released yesterday by the Bureau of Economic Analysis, officially sending the country into what’s known as a ‘technical recession.’

📉 What does that mean?... America’s gross domestic product (GDP), a measure of the market value of all the goods and services produced over a period of time, has declined for two straight quarters. That’s it – the entire definition of a ‘technical recession.’

🤔 Then why is everyone getting so upset?... The White House yesterday pushed back against calling the current economy a recession, with President Biden citing record job growth and foreign business investment as proof that people shouldn’t be using the term.

• "When you're creating almost 400,000 jobs a month, that is not a recession," Treasury Secretary Janet Yellen said in a recent interview with NBC News.

✋ On the other hand: Inflation is running at a 40-year high, there are still widespread product shortages, the US trade deficit hit a record high in March, and big box retailers like Walmart have warned profits are shrinking due to changing consumer habits.

📝 So, what’s the actual definition?... The National Bureau of Economic Research, the official arbiter of US recessions, defines it as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.”

• A committee of eight NBER economists – which consider factors like nonfarm payrolls, industrial production, and retail sales, but not GDP – is in charge of designating the official start and end of all US recessions, usually months after the fact.