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MicroBadger_ t1_j199kne wrote

> A recession is typically declared by experts when a nation’s economy experiences two consecutive quarters of negative gross domestic product (GDP)

The moment I saw this line, I knew the rest of this wall of text would be complete dog shit. And frankly wasn't disappointed.

Let's start with the 2 negative GDP equals a recession. Look at this and kindly explain how we get a 2-month recession in 2020 if that doesn't even equal one fucking quarter.

Layoffs - You examples are solely tech based which went through a massive boom during covid and now that things have settled down, they realized they over fucking hired and are having to adjust.

Stock market - I get this is WSB but the stock market doesn't equal the general economy. With the increase in rates, decent risk adjusted returns can be found outside of stocks. Not a shock to see capital leave over valued equities.

Final note, I would draw your attention to the U6 rate. Every other recession, that rate is going up before we "Officially" hit a recession and during the recession, it fucking goes parabolic. What's the trend been for 2022? Fucking down.

We could easily enter into a recession in 2023 but it sure as shit hasn't happened yet.

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Moist_Lunch_5075 t1_j1azb5j wrote

I'm so tired of correcting the "experts define a recession as two quarters of negative GDP" bullshit. LOL

I especially hate the "the white house changed the definition" idiocy.

A recession has been a broad-based decline across the economy for a long time. The NBER didn't change the definition for this drawdown. It was this way when I started taking econ courses for my degree 25 years ago. I'd say I'm having a Mandela Effect moment, but the NBER's definition remains that it requires a broad-based economic pullback for a recession.

The thing people say to defend this is "GDP IS the economy, dummy" which is bullshit. A macro score of overall productivity? Sure... a sign of overall economic weakness? GDP can decline because of cyclical events as certain sectors of the economy retract, but others can have strength at the same time, which is pretty much what we saw during the two negative quarters this year.

We tell people to look for two quarters because it's a lot easier than explaining what a broad-based pullback in economic activity is and, frankly, people glaze over and often don't get it... and GDP usually goes up. The GDP rule is an indicator of potential coming weakness. Just an indicator, not a definition of a recession... but somehow this BS became a truism.

Weirdly, you can also have a recession with positive GDP once you've entered the decline because GDP growth/retraction is inherently relative... this is the danger of just using GDP, and why it's important not to declare one until you have solid data.

The whole exercise feels silly to me, too. Like... what's the use of trying to pinpoint whether we're in a recession right?

Do we need to do that to consider risk to equities? I mean, yes, it's important to keep an eye on expectations around a recession... but we know they're there. Anyone who can read a chart (which I guess lots of people on this sub can't, so there's that LOL) knows the market's in a downtrend experiencing heavy risk of potential capitulation... and the truth is no matter what we guess, whether we enter a recession this year or not or have already started one, the hedge is basically the same. The risk is basically the same entering into the year... and when that risk level changes, it's gonna be based on information we don't have right now.

So like... what's the fuckin' point of trying to call a recession early besides the political axes some people are grinding?

Anyway... just wrote that to supplement your post.

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