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A Framework That Provides Clarity

During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.

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Nominal GDP Growth Falls Again


So, with U.S. GDP growth at 2.5%, how can we be in recession? 

Few realize that GDP data for almost all the early quarters of recent recessions have been revised down dramatically.

Recall that the GDP release on August 28, 2008 – with the economy eight months inside the Great Recession – revised Q2/08 GDP growth to 3.3% from 1.9%, up from 0.9% in Q1/08. But both of those data points, as well as GDP data for the first two quarters of the 2001 and 1990-91 recessions, were revised by 2 to 4 percentage points over time. This is how real-time data often behave during recessions.

In any case, yoy nominal GDP growth at or below 3.7% has been seen only in recessionary contexts. In Q1 2013, it fell to 3.4%, the second straight quarter below 3.7%.

Related News & Events

GDP Growth Lower Than Expected

International Business Times April 26, 2013

“Few realize that GDP data for almost all the early quarters of recent recessions have been revised down dramatically,” said Lakshman Achuthan. More

 

Recession in the Yo-Yo Years

ECRI March 8, 2013

Year-over-year growth in nonfarm payroll jobs has now dropped to an 18-month low, and household job growth has dropped to a 16-month low. See images and notes on the state of the business cycle. More