Recessions are officially “called” by a group called the NBER Business Cycle Dating Committee (made up of academic macroeconomists from the best schools).
They are looking for a pervasive decline, that is correlated across both space (most of the country), and time (at least several months for a recession).
In this class in Spring 2016, we discussed heavily whether or not the U.S. seemed like it was peaking, or had already peaked (see here, here, and here especially).
This soft period didn’t last, and the Committee did not call a peak or trough.
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Neil Irwin (a journalist who covers macro) now argues in an op-ed in The New York Times entitled “The Most Important Least-Noticed Economic Event of the Decade” that this was a mini-recession.
There’s no such thing officially. But we have had significant soft spots before (1986-7 associated with the stock market crash, and 1966-7 associated with widespread urban riots).
So what does Irwin think about this one?
First, while the Trump administration has claimed full credit for a surge in business investment, the bounce-back from the mini-recession is a major factor.
White House economists have presented charts showing a surge starting in the fourth quarter of 2016, when the election took place. But that turnaround began in mid-2016 by most measures, not late 2016 as suggested by the White House’s “six quarter compound annual growth rate” measure.
Second, the mini-recession might well have affected some political attitudes during the 2016 election. While the economy was in pretty good shape for people in large cities on the coasts, 2016 was rough for a lot of people in local economies heavily reliant on drilling, mining, farming or making the machines that support those industries.
I don’t put too much stock into these, but I don’t dismiss them either. Macro is like that.
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