The US economy returned to positive growth for the third quarter of 2022, the Bureau of Economic Analysis reported this morning. The Gross Domestic Product (GDP), the sum of all goods and services, grew by 2.6 percent, outpacing the Dow Jones forecast of 2.3 percent. After declines in the first two quarters of 2022, the positive growth at least temporarily heads off worries that the economy is in recession, or maybe it won’t when it’s reported on Fox News.
The economy declined by 1.6 percent in the first quarter and .6 percent in the second, and because one rule of thumb definition of “recession” simplifies as two consecutive quarters of economic contraction, a number of conservative politicians have been saying the US is in one. Or was, until this morning. But other economic conditions, like job growth, continued to be strong for most of the year, which argues against the idea that it was a recession. The actual determination is made by the theNational Bureau of Economic Research, specifically its “Business Cycle Dating Committee,” which often only says the economy was in recession well after it’s over and the economy is recovering.
In summary, Economics is weird. Also, contrary to rumor, the Business Cycle Dating Committee does not actually pair up lonely academic economists with horny hedge fund managers.
So the important question today is, should you liquidate your rare Hot Wheels collection and put it all in My Little Pony collectibles, or should you have another cup of coffee and a piece of pie? Probably the latter. CNN Business notes that Joe Biden “hailed the GDP rebound,” possibly by shouting “Ahoy!” But also by saying the report is “further evidence that our economic recovery is continuing to power forward.” It’s definitely the sort of news you’d welcome a week and a half before the midterm elections.
Here’s CNN’s econobabble on what this all means:
While the economic growth underscores that the United States is not currently in a recession, economists cautioned that the latest GDP report doesn’t mean one isn’t imminent.
Much of the gains were fueled by a rebalancing of imports and exports, with fewer foreign goods shipped to the United States as consumers shifted their attention away from pandemic-fueled spending on sofas, bikes and other durable goods and turned to travel and dining out.
Consumer spending grew by 1.4% on an annualized basis which, though better than expected, marks a slowdown from the first two quarters.
“Excluding the more volatile categories, the trajectory for growth looks weak,” Jeffrey Roach, chief economist for LPL Financial, said in a statement. “A deteriorating housing market and nagging inflation, along with an aggressive Federal Reserve, put the economy on unsure footing for 2023.”
Well goddamn that trajectory. Also, again with the bikes?
Adding to potential “recession ahead” talk is the fact that inflation still has the Federal Reserve spooked, which could mean further interest rate hikes with the aim of curbing demand. Today’s numbers might indicate that the Fed’s prior rate hikes are starting to cool the economy. CNN dragged another economist, Andrew Patterson of Vanguard, out from behind a curtain to tell us we know nothing of his work, and also to note that
The latest report, which showed a decline in imports coupled with decreases in housing investments and a slowdown in consumer spending, is a reflection of a broader easing of demand, Patterson said.
That’s something the Fed has been hoping to see as it enacted a series of blockbuster rate hikes aimed at pulling down historically high inflation.
“This is another sign that Fed policy is having the intended impact,” he said.
So is a recession coming? Maybe next year. Or maybe not! One thing that would pretty much guarantee a recession would be if Republicans take over the House and refuse to raise the debt ceiling, which would cause the US to default on its debts and crash the economy.
Previously on Wonkette: Government Shutdown Season Is Different From Debt Ceiling Season: A Handy Wonkette Guide
So hey, you and all your friends can do something very definite to head off a recession: Hit the phone banks, get out and knock on doors, and keep the House in Democratic hands. It’s a thought.
[CNN Business / NPR / CNBC]
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