Most Americans think the U.S. is in a recession right now.
Roughly 76 percent of Americans believe the economy is already in a recession, according to a September poll by Cinch Home Services.
The current economic picture, with a strong labor market, does not fit a traditional definition of a recession. Yet 11 percent of economists surveyed by the National Association of Business Economics believe the U.S. is in a recession.
We asked San Diego area economists and business leaders this question: Is the U.S. already in a recession?
Kirti Gupta, Qualcomm
NO: The most recent GDP numbers show a 2.6 percent annualized GDP growth rate — great news after the first two quarters of negative GDP growth rate. Additionally, the labor market is very strong with historically low unemployment rate (3.5 percent), high job openings, and palpable worker shortage. However, brace yourself for a difficult 2023. With sustained high inflation and the Fed's commitment to increase interest rates, an economic slowdown is unavoidable.
James Hamilton, UC San Diego
NO: A defining characteristic of an economic recession is that the number of people with jobs falls and the unemployment rate shoots up. The U.S. has been adding over a quarter of a million new jobs every month for two years. The unemployment rate is currently at 3.5 percent, the lowest level in half a century. I worry that we might soon fall into a recession. But anyone who says we're already in a recession is simply wrong.
Austin Neudecker, Weave Growth
YES: By most definitions? No. GDP adjusted for inflation last quarter was positive. Unemployment is historically low. But, consumer prices continue to climb, the stock market is down, and the Fed will increase rates further. An official recession is looming and economists will likely define the start of that recession backward to include this period. The realities for most households are that everything is more expensive, their savings are declining, and wages are not increasing enough.
Chris Van Gorder, Scripps Health
NO: That is, technically. The National Bureau of Economic Research has not yet declared that we are in a recession, but, in the past, the indicators have been present before the declaration. So even though we are not yet there, the Fed is expected to raise interest rates 75 basis points once again and I expect we will officially be in a recession soon, if not already. Hoping it will be mild.
Norm Miller, University of San Diego
NO: We are clearly not in a recession, based both on net employment gains and recent GDP reports. The economy has predictable lags and current slowdowns in housing will result in less spending on brokerage fees, mortgage fees, title fees, moving expenses, furniture purchases, etc. and that could easily lead us into a recession by mid-2023. Keep in mind that expectations of a recession and corresponding belt-tightening can also hasten a recession, so media spin matters.
Jamie Moraga, IntelliSolutions
YES: We technically entered a recession in July. Recessions usually produce declines in consumer demand and economic activity, primarily two consecutive quarters of decline in gross domestic product. According to the Bureau of Economic Analysis, GDP decreased 1.6 percent in Q1 2022 and 0.6 percent in Q2 2022. High inflation also continues to be a significant issue with increased costs for fuel, food, and products and services. The dichotomy is that unemployment remains low, and that GDP increased 2.6 percent in Q3 2022.
David Ely, San Diego State University
NO: While real GDP fell in the first half of the year, it grew in the third quarter. Based on data from the Bureau of Labor Statistics, the unemployment rate is at 3.5 percent and monthly job growth has averaged 420,000 in 2022. Other broad measures, including personal consumption expenditures and industrial production, do not indicate the U.S. is in a recession. However, with sharply higher interest rates and sluggish global growth, the U.S. could enter a recession in 2023.
Ray Major, SANDAG
N/A: Yes and No. Technically, we have experienced two quarters of economic decline in the first half of 2022. By conventional definition, we were in a recession. By July, the economy improved a bit, which indicated that we were no longer in a recession. However, troubling global and national indicators, and the Federal Reserve's determination to squelch the highest inflation since the 1980s, by raising interest rates, will inevitably force the nation's economy into a true recession by the summer of 2023.
Caroline Freund, UC San Diego School of Global Policy and Strategy
NO: With an unemployment rate of 3.5 percent and two job openings for every person seeking work, the U.S. is not in a recession. Most economists think a recession is likely next year because the Fed will keep hiking interest rates to reduce inflation. Finding the right dose of bitter medicine to slow growth without triggering a recession is tough. Thus, periods of high inflation and Fed tightening have typically been followed by recessions.
Kelly Cunningham, San Diego Institute for Economic Research
YES: Following two quarters of decline, the preliminary third quarter GDP advance estimate is reportedly positive. Latest growth, however, is primarily driven by exports in overblown U.S. dollar value, and not "real" increase of external trade. Consumer spending is plummeting as we experience "stagflation" (economic stagnation and persistent price increases). Indicators are flashing red as massive debt and rising interest rates leave the economy reeling and worsening in recession that will not be short or shallow.
Lynn Reaser, economist
NO: After slumping in the first two quarters, the economy expanded again in the third quarter. Unemployment is low and companies are pushing up wages to attract workers. Consumer spending on services, such as travel is strong. A recession is likely next year unless inflation slows appreciably. Otherwise, the Fed will keep boosting interest rates. A strong dollar will hurt exports while high mortgage rates weigh further on housing and business capital spending will slow.
Phil Blair, Manpower
NO: Not by laymen's standards. Economists may have their metrics to make it black and white but until there are consistent large layoffs and no new jobs to move to then Joe Citizen does not consider the economy in a recession.
Gary London, London Moeder Advisors
NO: The key economic tracking metrics are still stubbornly strong. But it really doesn't matter. If people act as if there is recession by spending less, or deferring purchases as costs rise, producers will cut back and so begins an economic downward spiral. We are now on that precipice. Of greater concern to me is the long-term economic erosion that is hollowing out the middle class. That is a national malaise that matters more than cyclical recession.
Alan Gin, University of San Diego
NO: The definition of a recession as two quarterly drops in GDP is just a rule of thumb. Economists look at measures such as employment, real income, real consumer spending, and industrial production. Of those, only real income is down in the last year. The rule of thumb usually works but GDP was distorted in the first quarter by an increase in imports (a sign of strength for the economy) and in the second quarter by a drawdown in inventories, which could go either way.
Bob Rauch, R.A. Rauch & Associates
YES: The Federal Reserve assumes that raising interest rates is the answer. Most likely, those continued actions will damage the economy and cause a recession rather than the desired soft landing. When revisions to GDP are made, we will find that we have been in an "inflation-caused" recession all year and it will continue well into 2023. Stop raising rates, reduce taxes and regulations, allow us to be energy independent and let our economy thrive.
