Recession: A Biz Kid$ 101 Guide

The Chairman of the Federal Reserve says there’s nothing to it.

The President of the United States says it isn’t happening.

The Treasury Secretary says so too.

So why do so many people feel the need to proclaim that something isn’t happening? Because of charts like these:

Up for debate is whether or not the United States is in the middle of a good old fashioned recession. And up for interpretation is the government’s official data on the American G.D.P. (“gross domestic product,” which is the total value of all the finished goods or services produced by a country). What’s not being debated is the data itself. The powers that be tell us that American G.D.P. decreased 0.2% in the second quarter of the year. What is being disputed is what that means. Some say it’s a clear sign of an economic slump, full stop. Others argue that “recession” is a more official phrase that we haven’t yet sunken to.

Here's what Merriam-Webster says:

We see you, number three. If a “period of reduced economic activity” is all that’s required for the R word to be wheeled out, then it appears we’re already there. But wait. There’s another voice in the room.

The National Bureau of Economic Research defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.” That’s the definition POTUS and Secretary Yellen want you to consult.  

All of this caused Conan O’Brien to quip that the administration is going to great lengths to avoid acknowledging that the R-word could be coming – or already here.

Whether you believe Webster, Biden, or O’Brien, one thing is clear: now is a good time to brush up on your economics. (Psst, we have an entire page dedicated to the subject.)