Welcome to DU!
The truly grassroots left-of-center political community where regular people, not algorithms, drive the discussions and set the standards.
Join the community:
Create a free account
Support DU (and get rid of ads!):
Become a Star Member
Latest Breaking News
Editorials & Other Articles
General Discussion
The DU Lounge
All Forums
Issue Forums
Culture Forums
Alliance Forums
Region Forums
Support Forums
Help & Search
Economy
Related: About this forumThis Recession May Be Mild. The Second One Will Be Worse.
Barrons.com
This Recession May Be Mild. The Second One Will Be Worse.
Robert Heller
Tue, July 12, 2022, 3:30 AM
The U.S. is likely entering the first dip of a double-dip recession, writes former Federal Reserve Board Governor Robert Heller.
This Recession May Be Mild. The Second One Will Be Worse.
Robert Heller
Tue, July 12, 2022, 3:30 AM
The U.S. is likely entering the first dip of a double-dip recession, writes former Federal Reserve Board Governor Robert Heller.
ECONOMY & POLICY
This Recession May Be Mild. The Second One Will Be Worse.
COMMENTARY
By Robert Heller
July 12, 2022 3:30 am ET
About the author: Robert Heller is a Former Member of the Board of Governors of the Federal Reserve System.
The U.S. has now likely entered a recession, and the chances are good that this will be the first dip of a double-dip downturnthereby repeating the experience of the early 1980s.
The most recent data published by the Bureau of Economic Analysis show that real gross domestic product decreased at an annual rate of 1.6% in the first quarter of this year. And the GDPNow data published by the Atlanta Fed peg the growth rate for the second quarter at a negative 1.9%. Many economists regard two quarters of negative growth as a recession, but it is up to the National Bureau of Economic Research to make the official callwhich usually takes them quite a long time to accomplish.
A number of factors have contributed to the economic slowdown. Among them are the cessation of federal stimulus payments to individuals and corporations, as well as a significant slowdown in the construction and goods-producing industries.
However, Federal Reserve policy is still highly stimulative. The official Fed Funds Rate is now pegged at 1.50-1.75%, but the consumer-price index has risen by 8.6% over the last year, yielding a real or inflation-adjusted fed funds rate of approximately minus 7%. This is a highly stimulative fed funds rate by any measure. Similarly, longer-dated treasury bonds offer only negative rates of return in the neighborhood of minus 5%. If the policy of the Federal Reserve were truly restrictive, one would expect the fed funds rate and Treasury yield curve to be above the inflation rate.
{snip}
This Recession May Be Mild. The Second One Will Be Worse.
COMMENTARY
By Robert Heller
July 12, 2022 3:30 am ET
About the author: Robert Heller is a Former Member of the Board of Governors of the Federal Reserve System.
The U.S. has now likely entered a recession, and the chances are good that this will be the first dip of a double-dip downturnthereby repeating the experience of the early 1980s.
The most recent data published by the Bureau of Economic Analysis show that real gross domestic product decreased at an annual rate of 1.6% in the first quarter of this year. And the GDPNow data published by the Atlanta Fed peg the growth rate for the second quarter at a negative 1.9%. Many economists regard two quarters of negative growth as a recession, but it is up to the National Bureau of Economic Research to make the official callwhich usually takes them quite a long time to accomplish.
A number of factors have contributed to the economic slowdown. Among them are the cessation of federal stimulus payments to individuals and corporations, as well as a significant slowdown in the construction and goods-producing industries.
However, Federal Reserve policy is still highly stimulative. The official Fed Funds Rate is now pegged at 1.50-1.75%, but the consumer-price index has risen by 8.6% over the last year, yielding a real or inflation-adjusted fed funds rate of approximately minus 7%. This is a highly stimulative fed funds rate by any measure. Similarly, longer-dated treasury bonds offer only negative rates of return in the neighborhood of minus 5%. If the policy of the Federal Reserve were truly restrictive, one would expect the fed funds rate and Treasury yield curve to be above the inflation rate.
{snip}
InfoView thread info, including edit history
TrashPut this thread in your Trash Can (My DU » Trash Can)
BookmarkAdd this thread to your Bookmarks (My DU » Bookmarks)
2 replies, 1185 views
ShareGet links to this post and/or share on social media
AlertAlert this post for a rule violation
PowersThere are no powers you can use on this post
EditCannot edit other people's posts
ReplyReply to this post
EditCannot edit other people's posts
Rec (1)
ReplyReply to this post
2 replies
= new reply since forum marked as read
Highlight:
NoneDon't highlight anything
5 newestHighlight 5 most recent replies
This Recession May Be Mild. The Second One Will Be Worse. (Original Post)
mahatmakanejeeves
Jul 2022
OP
FBaggins
(27,714 posts)1. The NBER clarification isn't going to help much politically
If the Atlanta fed's "GDPNow" estimate turns out to be the reported GDP figure for Q2, it's going to be called a recession. "It isn't really a recession until NBER says that it is and that won't happen until well after the election" isn't likely to be a very effective defense.
progree
(11,463 posts)2. GDPNow: It's been minus 1.2% since July 8 (not minus 1.9%)
https://www.atlantafed.org/cqer/research/gdpnow
I think this clown reporter is just reading something he scraped off the Intertubes. Any idiot can check in 3 seconds, just type GDPNow in Google and it pops right up at the top.
I know that's thin beer, but one should read the the disclaimer, e.g.
Also the latest consensus of the Blue Chip survey of economists is PLUS 3.0%, although that was about June 26 according to the graph.
I can't believe the economy fell apart between June 26 and July 8, but because the July 8 jobs report failed to show 2 million jobs created in June, it might have. (sarc)
And now we have the Breakfast Taco-Gate scandal consuming the presidency (sarc)
I think this clown reporter is just reading something he scraped off the Intertubes. Any idiot can check in 3 seconds, just type GDPNow in Google and it pops right up at the top.
I know that's thin beer, but one should read the the disclaimer, e.g.
GDPNow is not an official forecast of the Atlanta Fed. Rather, it is best viewed as a running estimate of real GDP growth based on available economic data for the current measured quarter. There are no subjective adjustments made to GDPNowthe estimate is based solely on the mathematical results of the model.
Also the latest consensus of the Blue Chip survey of economists is PLUS 3.0%, although that was about June 26 according to the graph.
I can't believe the economy fell apart between June 26 and July 8, but because the July 8 jobs report failed to show 2 million jobs created in June, it might have. (sarc)
And now we have the Breakfast Taco-Gate scandal consuming the presidency (sarc)