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Is the Economy Heading Toward Another Recession? It Depends on Whom You Ask

Cal State Fullerton Economics Expert Offers Insight
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While the housing and labor market may be in good shape, recent U.S. government data paints a different picture, as the economy’s gross domestic product slumped for a second straight quarter.

This could eventually prompt the National Bureau of Economic Research to declare a recession, but several other factors would need to fall into place before that happens.

Cal State Fullerton associate professor of economics Pedro Amaral discusses what a recession really is, according to experts, and whether the economy is facing yet another one.

Amaral said: “Part of the debate is semantic and stems from the fact that while a street definition of a recession consists of two consecutive quarters of negative real inflation-adjusted GDP growth, which the U.S. economy has experienced in the last two quarters, the more accepted definition depends on the opinion of the NBER’s Business Cycle Dating Committee.”

“In addition to GDP growth, the committee considers a broader set of factors, including data on personal income, employment, consumer expenditure, wholesale and retail sales, and industrial production.”

“If I had to bet, I would say the NBER will eventually declare a recession. The Federal Reserve System’s efforts to fight inflation by increasing interest rates will cool down the economy even further. If inflation is stubborn and unresponsive to the hikes, interest rates are likely to climb even higher, deepening the recession and causing stagflation.”Read more about Amaral’s perspective.