IS IT A RECESSION OR SHOULD WE CALL IT SOMETHING ELSE?

IS IT A RECESSION OR SHOULD WE CALL IT SOMETHING ELSE? Annalisa and Lee Bryant have both written me recently to object to the way the “R word” is being thrown around. They think “recession” should have a precise meaning: two consecutive quarters of negative real growth in Gross Domestic Production. An economist who is one of my other correspondents also wrote me recently: “by the way, I like ‘sharp slowdown’ better than ‘recession.’” I think that the “two-quarter test” is best and that the casual use of “recession” is confusing. The advantages of the two-quarter test are that it is precise and can be applied readily by journalists and scholars. It has the drawback that GDP estimates are subject to frequent revisions, but this failing is inherent in trying to assess the economy. Nobody knows what is happening at any moment and especially at this moment. It may well turn out that when the numbers are in, we will have had two quarters of negative real growth in GDP.