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Response to doc03 (Reply #7)

Mon Jul 25, 2022, 10:18 AM

8. The NBER calls a recession at the TOP of the economy --

Per the NBER ( http://www.nber.org/cycles/recessions_faq.html ), recessions (contractions) begin at the peak of the economy and end at the trough (bottom) of the economy. And expansions (recoveries) begin at the trough of the economy and end at the peak of the economy.

One can see the recessions (the gray bands) beginning at about the point that unemployment is lowest.
https://www.nber.org/research/business-cycle-dating

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As for why we're having GDP contraction (Q1 at -1.6% annualized), I guess supply chain disruptions, causing huge drops in productivity. This is from the latest BLS productivity report --

http://www.bls.gov/news.release/prod2.nr0.htm

Nonfarm business sector labor productivity decreased 7.3 percent in the first quarter of 2022, the U.S.
Bureau of Labor Statistics reported today, as output decreased 2.3 percent and hours worked increased 5.4 percent.
This is the largest decline in quarterly productivity since the third quarter of 1947, when the measure decreased 11.7 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the same quarter a year ago, nonfarm business sector labor productivity decreased 0.6 percent, reflecting a 4.2-percent increase in output that was outpaced by a 4.8-percent increase in hours worked. (See table A1.) This is the largest four-quarter decline since the fourth quarter of 1993, when the measure also declined 0.6 percent.


I'm hoping the explanation is supply-chain, which has been easing, and that it has been easing enough to make Q2 come out positive GDP-wise.

It is possible that a tight labor side can be part of the economic output reduction as well.

To me, it doesn't feel like labor force nirvana when wages / salaries are not keeping up with inflation. And my life savings and fixed-dollar annuity is rapidly eroding in purchasing power.

I got my first professional job in 1977, in the aftermath of 1973-74 recession when the unemployment rate was 7.5%, after many months of unemployment after graduation with an MSEE, so it's not my first rodeo, recession-wise. And I agree that the present situation isn't at all like any of these past recessions.


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