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HomeEconomyOnce and for all: The 'recession' in the first half of 2022

Once and for all: The 'recession' in the first half of 2022


Use Sahm's rules:

figure 1: The Sahm rule index uses the current year of data (blue) and the year using real-time data (tan), both expressed as percentages. The threshold for recession is the horizontal red dotted line, which is 0.5%. Light green shading indicates 2022H1. Source: Fred.

Sam's Rule is a good indicator of when a recession, as defined by the NBER, begins. Now, if you want to define a recession as a decline in VMT, a decline in gasoline consumption, a decline in sentiment in Michigan, a decline in real wages, or two consecutive quarters of negative GDP in the current year, or a negative output gap i, or a negative GDI Two quarters are negative, then you may see a recession in 2022H1. Just understand that this may not be a recession as defined by others.

By the way, here is a picture of GDP, GDI, GDO and GDP+. GDO falls, but GDP+ rises in H1 2022…

figure 2: GDP (black), GDI (tan), GDO (green), GDP+ as 2019 Q4 index (red), all in billions of seasonally adjusted (SAAR) units for the 2017 quarter. Light green shading indicates 2022H1. Source: Bank of East Asia, Philadelphia Fedand the author's calculations.



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