The reason why there's a debate is that by some measures, we're in a recession, but by other measures, we're not. Jobs is extremely strong. From a jobs perspective, we are not in a recession.
And so cues the debate. Which measures _should_ we focus on? Etc. etc.
The only thing with any certainty, is that I know we'll be retroactively be declared to have been in a recession for months. The NBER is 100% trusted on calling the recession, but they're also always late to the party by several months.
NBER always calls the recession accurately, because they backdate their calls. Ex: in 2008, NBER declared that we've been a recession since 2007.
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Because of this effect, everyone wants to be "correct faster than NBER", so you see a whole lot of talking-heads talking about recession way too early (ie: before all the economic indicators prove we're in a recession). Everyone wants to predict the future after all, so that they can feel smarter about the whole situation.
EDIT: It should be noted that in the real world, it takes weeks, maybe months, to collect and process the statistics. That is to say, we won't know how good our economy in October 2022 is, until maybe January of 2023. That's why NBER is late, they need the time to collect statistics and analyze them. But its also why everyone who is trying to call the Recession "as it happens" (IE: call a January Recession in January) is inevitably going to be wrong, because they're baseless and without any actual data backing that sentiment.
Data and statistics take time. Many months. Just sit tight and wait. Have patience. There's no real benefit (or downside) to being "early" or "late" to calling the recession. Getting the call correct is important. It takes many months to spin up employees and/or fire them anyway (good severance pay is multi-month affair after all)
> There's no real benefit (or downside) to being "early" or "late" to calling the recession.
Isn't there a large financial benfit?
Like if you could predict any up/down turns you know when to start buying/shorting stocks. Or even if you're a bank maybe don't lend out a ton of money at say 2% when next month you can lend at 5%.
> Like if you could predict any up/down turns you know when to start buying/shorting stocks
But the stock market doesn't always go down in a recession. And vice versa, a recession may happen, but the stock market may be fine. Ex: the recession of 1990 barely budged the stock market. While the Stock Market Crash of 1962 had nothing to do with the economy.
> Or even if you're a bank maybe don't lend out a ton of money at say 2% when next month you can lend at 5%.
But that's speculation upon the Fed Rate, which isn't about recessions at all. For example, the Fed Rate increased in from 0% in 2015 to 2% in 2019. Or from 1% in 2004 through 5% in 2006.
>>There's no real benefit (or downside) to being "early" or "late" to calling the recession.
For people interested in understanding exactly what the economy does in detail, of course it is more important to get it right than getting it early.
However, for some sets of short-medium-term investors, there could be a very real benefit to calling the trend correctly and early.
I'm quite convinced that what is happening here is what happens to every complex system after a large uncontrolled disturbance - all the subsystems oscillate wildly and often not with the same leading/following indicators. This is just that happening until it gets damped.
I see a key real-time recession indicator as just the level of traffic in the area (I'm north of Boston). Obviously not hard numbers, but quiet vs dense & fast traffic seems to indicate better whether we're going into recession or not. The traffic has only increased since the beginning of the year, and indeed, the last quarter came out as 2%+ growth...
You've got it backwards. As a society, we've already given NBER the authority to declare recessions. They are the official recession caller of the country.
Its you who has to argue why NBER's methodology is wrong.
The NBER has no authority. They are simply stating their opinion. Perhaps some people use NBER's opinion to influence their decisions, but you, or any court, is not under the obligation to use their opinion (unless specified in a contract).
And so cues the debate. Which measures _should_ we focus on? Etc. etc.
The only thing with any certainty, is that I know we'll be retroactively be declared to have been in a recession for months. The NBER is 100% trusted on calling the recession, but they're also always late to the party by several months.
NBER always calls the recession accurately, because they backdate their calls. Ex: in 2008, NBER declared that we've been a recession since 2007.
--------
Because of this effect, everyone wants to be "correct faster than NBER", so you see a whole lot of talking-heads talking about recession way too early (ie: before all the economic indicators prove we're in a recession). Everyone wants to predict the future after all, so that they can feel smarter about the whole situation.
EDIT: It should be noted that in the real world, it takes weeks, maybe months, to collect and process the statistics. That is to say, we won't know how good our economy in October 2022 is, until maybe January of 2023. That's why NBER is late, they need the time to collect statistics and analyze them. But its also why everyone who is trying to call the Recession "as it happens" (IE: call a January Recession in January) is inevitably going to be wrong, because they're baseless and without any actual data backing that sentiment.
Data and statistics take time. Many months. Just sit tight and wait. Have patience. There's no real benefit (or downside) to being "early" or "late" to calling the recession. Getting the call correct is important. It takes many months to spin up employees and/or fire them anyway (good severance pay is multi-month affair after all)