Apr 13, 2022 - Economy

We're not in a recession

Data: Bureau of Economic Analysis; Chart: Axios Visuals

Recession fears are denting consumer confidence, and could play a major role in the results of this year's midterm elections. But we're not in a recession, and economic downturns are notoriously difficult to forecast.

Why it matters: The U.S. is struggling with levels of inflation that haven't been seen for 40 years. For a public struggling with soaring prices, that can feel tantamount to a recession.

  • Inflation and recession are very different things. At the moment, we're still seeing strong growth — even after accounting for inflation. Still, the economy's momentum has slowed, and headwinds are rising.

Context: Recessions are officially timed by the Business Cycle Dating Committee of the National Bureau of Economic Research. And most are brief: The 2020 recession, the deepest in recent memory, lasted just two months.

By the numbers: Prices are increasing at an annual pace of 8.5%, according to inflation data released Tuesday morning. That's high, but it's still slower than the rate at which the economy is growing.

  • In the fourth quarter of 2021, GDP grew by an astonishing $800 billion, a torrid 14.5% annual pace. A lot of that was due to prices going up, but even when you strip out the effects of inflation, the growth rate remained extremely high at 6.9%.
  • In 2022, Wall Street expects the economy to grow by a healthy 3.3%, per FactSet — after subtracting inflation.

The big picture: During a recession, it's hard to find work, layoffs rise, and spending falls. None of that is happening right now.

  • Even the most pessimistic economic forecasters don't foresee a recession happening until the end of 2023, after a series of rate hikes by the Federal Reserve that have yet to happen.

The bottom line: For the unofficial signs that we might be in a recession, look first to employers. If job openings dry up, and layoffs become more common, that'll be a sign the economy is turning south.

Go deeper