Economic slowdown but no recession! That message comes from the latest employment report, service sector data, and Federal Reserve.
“We’re not in a recession right now. We do have these two-quarters of negative GDP growth. To some extent, a recession is in the eyes of the beholder. With all the job growth in the first half of the year, it’s hard to say there’s a recession. With a flat unemployment rate at 3.6%, it’s hard to say there’s a recession.” – James Bullard, St. Louis Federal Reserve President
Such a statement certainly belies much of the economic consensus that two-quarters of negative economic growth constitutes a recession. As shown, the latest GDP report indeed met that measure.
However, as stated, some indicators suggest the economy is in a slowdown but not yet in a recession. For example, our composite Institute Of Supply Management (ISM) survey is still in expansionary territory. Since services make up about 80% of the economy today, there is currently support for economic growth. However, the data trend is negative and supports the view of an economic slowdown.
Employment also remains extremely strong. With the unemployment rate near historic lows, such does support the statement a recession is not underway. However, low unemployment rates are historically pre-recessionary and will reverse quickly as a recession takes hold.