After two quarters in a row of negative GDP growth, the US is in a recession, according to the rule of thumb people like former president Bill Clinton (D) acknowledged 30 years ago, and NYC mayor Eric Adams (D) used three days ago. However, the White House changed its definition a few days ago, leading to a nationalized debate and edit warring on Wikipedia.
A recession was previously defined as two quarters in a row of negative GDP growth, but the White House has changed the definition to “a significant decline in economic activity spread across the market, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.” However, there is some controversy over this change, as two consecutive quarters of negative real GDP growth have consistently forecasted a recession for over 75 years.
But no matter what the definition of a recession is, or who thinks we are in one, the effects of economic downturn have already vibrated to all corners of society. The pain has been felt by both consumers and retailers; the economic indicators of a recession are present.
One indicator is the tech companies in Silicon Valley. Those companies, like Google and Apple, usually outrun expectations, but executives have said that there seems to be a slow-down in spending by consumers. Procter & Gamble has already predicted a tougher 2023, while both Walmart and Best Buy have already foreseen a worse than expected earning report that comes out in August.
The current recession was caused in part by the FED. To combat sky-high 10% inflation, the Federal Reserve once again raised rates last week to make it harder for people to spend borrowed money. This helps to slow inflation, but raising rates pushes economies into recessions by slowing demand and jobs across the board. Higher rates also disincentivizes corporate expansion and spending because loans get more expensive and interest rates are higher. Some companies are already under pressure because the high rates are making it very difficult to spend borrowed money. These companies, with many others, are already reporting severe warning signs.
Small business owners have also been hit hard. Thomas Combs, a 52-year-old Dallas man said the inflation and recession of late has “completely changed” the way he spends money, including by cutting back on treats like gourmet coffee and ice cream. Combs says repairing his car has also gotten more expensive too, but he must cope.
Consumers and workers like Shannon Villa, a 32-year-old Amazon warehouse worker, also must cope with the staggering prices at the pump and in the stores. “[Prices go] up, [but] I still need it. I can’t afford to complain. I just got to adjust.”
A recession was previously defined as two quarters in a row of negative GDP growth, but the White House has changed the definition to “a significant decline in economic activity spread across the market, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.” However, there is some controversy over this change, as two consecutive quarters of negative real GDP growth have consistently forecasted a recession for over 75 years.
But no matter what the definition of a recession is, or who thinks we are in one, the effects of economic downturn have already vibrated to all corners of society. The pain has been felt by both consumers and retailers; the economic indicators of a recession are present.
One indicator is the tech companies in Silicon Valley. Those companies, like Google and Apple, usually outrun expectations, but executives have said that there seems to be a slow-down in spending by consumers. Procter & Gamble has already predicted a tougher 2023, while both Walmart and Best Buy have already foreseen a worse than expected earning report that comes out in August.
The current recession was caused in part by the FED. To combat sky-high 10% inflation, the Federal Reserve once again raised rates last week to make it harder for people to spend borrowed money. This helps to slow inflation, but raising rates pushes economies into recessions by slowing demand and jobs across the board. Higher rates also disincentivizes corporate expansion and spending because loans get more expensive and interest rates are higher. Some companies are already under pressure because the high rates are making it very difficult to spend borrowed money. These companies, with many others, are already reporting severe warning signs.
Small business owners have also been hit hard. Thomas Combs, a 52-year-old Dallas man said the inflation and recession of late has “completely changed” the way he spends money, including by cutting back on treats like gourmet coffee and ice cream. Combs says repairing his car has also gotten more expensive too, but he must cope.
Consumers and workers like Shannon Villa, a 32-year-old Amazon warehouse worker, also must cope with the staggering prices at the pump and in the stores. “[Prices go] up, [but] I still need it. I can’t afford to complain. I just got to adjust.”
