I was working at CEA in early 2001 (April or May) and I remember a conversation where I was convinced that based on the latest data available, there would be no recession. So with all the data I review, keep in mind that the data will be revised (especially GDP will be revised again and again).
As Wang and Orlik point out, before each recent recession, a significant number of people or analysts thought we had dodged a bullet.
source: Wang, Orlick, Bloomberg, October 1, 2023.
Here is the evolution of GDP contour estimates during the 2001 recession (I plagiarized myself postal).
figure 1: GDP (in billions) 1996$ Sal. NBER defines peak and trough dates at the dotted lines. The GDP calculation method on June 29, 2022 is nominal GDP divided by the GDP deflator, adjusted to 1996 = 100. Source: BEA, ALFRED, NBER, and author's calculations.
The first reading of GDP at the end of April 2001 gave people a sigh of relief – the quarterly growth rate was about 2%:
figure 2: Quarter-on-quarter annualized real GDP growth. NBER defines peak and trough dates at the dotted lines. Source: BEA, ALFRED, NBER, and author's calculations.
This positive interpretation remains valid in the second and third releases. Pre-reads for Season 2 in 2001 were also positive. This continued to be the case in the second and third releases, and it was only in the third quarter that the advance reading turned negative and has remained so. However, the advance reading for the fourth quarter (January 30, 2002) was positive, so there were not two consecutive negative quarters.
Only after the early release of Q2 2002 (containing annual revisions) do we get consecutive negative readings, in this case three quarters, starting in Q1 and continuing through Q3.Annual revisions adjust GDP estimates for the previous five years (see here).
However, the BEA is fully revised every five years to incorporate the latest data. This again changes the contours of GDP – as shown in Figures 1 and 2. As the latest series of data shows, there have been no consecutive quarters of negative growth. However, the National Bureau of Economic Research (NBER) declared a recession from March 2001 to November 2001, and from the fourth quarter of 2001 to the fourth quarter of 2001 (peak to trough) (Recession Announcement November 26, 2001, Expansion Announcement, July 17, 2003).
So it's going to be a while before I can say with any confidence that there's no recession, at least in terms of gross domestic product. Other indicators may provide a quicker answer. (Of course, this also means that I will be reluctant – too reluctant for some – to declare that a recession is occurring).
On the other hand, I still think it's highly unlikely that Economic recession in the first half of 2022.
