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This is why we don't use one metric to determine recessions
It’s November 2, 2022. It’s a short one today! Here’s the rundown:
GDP numbers show the economy grew during Q3
Some quick thoughts about the midterm elections
Numbers and links
GDP numbers show the economy grew during Q3
The latest GDP numbers were…pretty good?
After two-straight quarters of negative GDP growth, the advanced estimate for Q3 showed that GDP increased by 2.6%. That’s somewhat surprising, given that recession talk is firing on all cylinders. But this is also why the people who declare recessions were trigger-shy in calling one in recent months — GDP numbers are a part of the equation, but not the whole thing.
Add in still-solid employment numbers, and it’s really hard to see where the economy is at. That said, we’re still likely to see a recession, especially as the Fed continues to increase interest rates to try and bring down price growth.
While the GDP numbers are good — it’s good news to see the economy grow — we need to anticipate that this number will be revised in the coming weeks or months. I would guess that it’ll be revised down (revisions, as I’ve written about before!), but we’ll have to wait and see. If you look deeper at the GDP report, too, you see that the main driver of growth this past quarter was an increase in net exports. That may be a one-time increase, though, so it’s hard to say whether it’ll be sustainable for quarters to come.
The numbers also showed economic slowing on many fronts. So, it’s a mixed bag. Again, this is why we don’t rely solely on GDP numbers to determine whether the economy is in a recession — if that matters at all.
There are also arguments that are worth considering that we should either rethink or disregard GDP altogether when trying to measure the success of the economy. Look around: We have worsening economic conditions, mounting layoffs, and yet, record profits in many sectors. It’s hard to tell what’s going on.
In fact, I recently spoke with an economist for a story I was working on, and he literally told me that “nobody knows what’s going on.” So, again, Quasimodo may as well have predicted all this.
Looking ahead? The economy may get a boost from the holiday season. There’s probably still pent-up demand to travel and buy stuff after the pandemic, and seasonal hiring will buoy things for a few months. And the Atlanta Fed’s GDPNow model is estimating that Q4 will see 2.6% growth again, though that will fluctuate in the coming weeks.
Again, though, I don’t think we should be worrying about GDP numbers. Eat some Halloween candy, have your annual pumpkin-spiced latte, and start asking family members when a pumpkin pie might materialize on your counter. Just live your life.
A few years from now, we’ll probably be flying high once again. It’s all a cycle, after all. Or, as Stephen King writes, “Ka is a wheel.”
About the midterm elections
Hey, there’s an election next week. A few thoughts.
The midterm elections are here. I’ve not been paying as much attention as I should, but it sounds like Republicans are likely to take control of at least one house of Congress. They’ll need to shut down some investigations and open up new ones, so we have that to look forward to.
I don’t have much to offer, but I do have a few things that I think we should all keep in mind before voting:
Nobody’s going to fix inflation — at least not quickly. So, no, you’re Congressional Representative from the 7th District of wherever isn’t going to help you on that front.
Voting for whatever candidate isn’t going to stop people from stealing razor blades at Walgreens in Manhattan or San Francisco.
A split government all but guarantees that nothing will get done for the next couple of years.
Nobody is going to come in and make the stock market go up 30%, drop gas prices by 30%, or make any kind of lasting change in the short term. Don’t expect it.
That said, you should vote. Just actually think about who and what you’re voting for before you do, though.
Numbers, links, and more
-4.1: The annual percent change in labor output, the sharpest drop in almost 80 years. (The Washington Post)
10.7%: Inflation in the Eurozone, a 40-year high, driven by a nearly 42% increase in food prices. (DW)
10: The number of top spots on the Billboard Hot 100 held by Taylor Swift, simultaneously. That’s a first. (Billboard)
“Missing other factors”: New research finds that mental illness is not the main cause of mass shootings, in most cases. (Columbia University Department of Psychiatry)
2023 will be the first year in U.S. history when we import more food than we produce: We really, really need more immigrants. (USA Today)
Church vs. State: The IRS doesn’t seem to care that churches routinely break the law by endorsing political candidates. If I’m ever put in charge of the IRS, churches better watch out — I’ll just say that. (ProPublica)