Recession and Depression

Latest story

113 Shares169 Views

GDP Report Shows US Economy Grew at 2.8% Rate

by

In a key economic report released just days before the presidential election, gross economic product rose at a 2.8 percent rate in the third quarter.Consumers are spending. Inflation is cooling. And the U.S. economy looks as strong as ever.Gross domestic product, adjusted for inflation, expanded at a 2.8 percent annual rate in the third quarter, the Commerce Department said on Wednesday. That came close to the 3 percent growth rate in the second quarter and was the latest indication that the surprisingly resilient recovery from the pandemic recession remained on solid footing.“The economy right now is firing on nearly all cylinders,” said Joe Brusuelas, chief economist at the accounting and consulting firm RSM.The report was the first of three crucial indicators on the nation’s economy scheduled for release this week, just days before the presidential election and the next policymaking meeting of the Federal Reserve.The strength in the third quarter was again driven by robust consumer spending, which grew at a 3.7 percent rate, adjusted for inflation. Rising wages and low unemployment meant that Americans continued to earn more, while inflation continued to ease: Consumer prices rose at a 1.5 percent annual rate in the third quarter and were up 2.3 percent from a year earlier.As recently as a few weeks ago, many economists were concerned that spending was about to slow as the job market weakened and household savings dwindled. But revised data released last month showed that incomes and savings were stronger than initially reported, and recent data on the job market has been strong. That suggests that spending could continue to grow — especially because data released by the Conference Board this week showed that consumers were at last feeling more confident in the economy.“Most consumers continue to be working,” said Dana Peterson, chief economist for the Conference Board. “If you’re a consumer and you’re working, then you’re going to spend.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

More stories

  • 113 Shares149 Views

    in Economy

    U.S. Economy Grew at 2.8% Rate in Third Quarter

    by

    In a key economic report released just days before the presidential election, growth was again driven by robust consumer spending.Consumers are spending. Inflation is cooling. And the U.S. economy looks as strong as ever.Gross domestic product, adjusted for inflation, expanded at a 2.8 percent annual rate in the third quarter, the Commerce Department said on Wednesday. That came close to the 3 percent growth rate in the second quarter and was the latest indication that the surprisingly resilient recovery from the pandemic recession remained on solid footing.“The economy right now is firing on nearly all cylinders,” said Joe Brusuelas, chief economist at the accounting and consulting firm RSM.The report was the first of three crucial indicators on the nation’s economy scheduled for release this week, just days before the presidential election and the next policymaking meeting of the Federal Reserve.The strength in the third quarter was again driven by robust consumer spending, which grew at a 3.7 percent rate, adjusted for inflation. Rising wages and low unemployment meant that Americans continued to earn more, while inflation continued to ease: Consumer prices rose at a 1.5 percent annual rate in the third quarter and were up 2.3 percent from a year earlier.As recently as a few weeks ago, many economists were concerned that spending was about to slow as the job market weakened and household savings dwindled. But revised data released last month showed that incomes and savings were stronger than initially reported, and recent data on the job market has been strong. That suggests that spending could continue to grow — especially because data released by the Conference Board this week showed that consumers were at last feeling more confident in the economy.“Most consumers continue to be working,” said Dana Peterson, chief economist for the Conference Board. “If you’re a consumer and you’re working, then you’re going to spend.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

  • 150 Shares139 Views

    in Economy

    The Best Books About the Economy to Read Before the 2024 Election

    by

    Voters are forever worried about the economy — the price of homes and groceries, the rise and fall of the stock market, and, of course, taxes — but the economic policies that affect these things often seem unapproachable. Donald Trump wants to cut taxes and raise tariffs. Kamala Harris wants to raise taxes on high-income households and expand the social safety net. But what does that mean? And what are they hoping to achieve?Part of what makes economic policy difficult is the need to understand not just the direct impact of a change but also its many indirect effects. A tax credit to buy houses, for example, might end up benefiting home sellers more than home purchasers if a surge in demand drives up prices.The mathematics and jargon that economists use in journals facilitate precise scientific communication, which has the indirect effect of excluding everyone else. Meanwhile, the “economists” you see on TV or hear on the radio are more often telling you (usually incorrectly) whether the economy will go into recession without explaining why.But some authors do a good job of walking the line between accessibility and expertise. Here are five books to help you crack the nut on the economy before Election Day.The Little Book of EconomicsBy Greg IpThe best way to understand things like the causes of recessions and inflation and the consequences of public debt is to take an introductory economics course and do all the problem sets. The second-best way? Read “The Little Book of Economics.” Don’t be fooled by its compact form and breezy writing: This book, by the Wall Street Journal chief economics commentator Greg Ip, manages to pack in just about everything you wanted to know but were afraid to ask about the gross domestic product.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

  • 125 Shares179 Views

    in Economy

    U.S. Economy Had Stronger Rebound From Pandemic, G.D.P. Data Shows

    by

    Updated figures show that gross domestic product, adjusted for inflation, grew faster in 2021, 2022 and early 2023 than previously reported.The U.S. economy emerged from the pandemic even more quickly than previously reported, revised data from the federal government shows.The Commerce Department on Thursday released updated estimates of gross domestic product over the past five years, part of a longstanding annual process to incorporate data that isn’t available in time for the agency’s quarterly releases.The new estimates show that G.D.P., adjusted for inflation, grew faster in 2021, 2022 and early 2023 than initially believed. The revisions are relatively small in most quarters, but they suggest that the rebound from the pandemic — already among the fastest recoveries on record — was stronger and more consistent than earlier data showed.

    .dw-chart-subhed {
    line-height: 1;
    margin-bottom: 6px;
    font-family: nyt-franklin;
    color: #121212;
    font-size: 15px;
    font-weight: 700;
    }

    Quarterly change in gross domestic product, adjusted for inflation
    Quarterly changes shown as seasonally adjusted annual ratesSource: Bureau of Economic AnalysisBy The New York TimesPerhaps most notably, the government now says G.D.P. grew slightly in the second quarter of 2022, rather than contracting as previously believed. As a result, government statistics no longer show the U.S. economy as experiencing two consecutive quarters of declining G.D.P. in early 2022 — a common definition of a recession, though not the one used in the United States. (The revised data still shows that G.D.P. declined in the first quarter of 2022, but more modestly than previously reported.)The official arbiter of recession in the United States is the National Bureau of Economic Research, a nonprofit research organization made up of academic economists. The group defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months,” and it bases its decisions on a variety of indicators including employment, income and spending.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

  • 163 Shares169 Views

    in Economy

    As Federal Reserve Readies Interest Rate Cut, Risks to Job Market Still Loom

    by

    The Federal Reserve is poised to lower interest rates this week. Recent jobs data have been a reminder that a soft landing is not yet assured.An object in motion stays in motion. Is a labor market trend that’s well underway any different?That’s the question looming for officials at the Federal Reserve as they try to pull off a feat that has never really been accomplished before: gently cooling an economy that was experiencing rip-roaring inflation without tanking the job market in the process.So far, the Fed’s attempt at a soft landing has worked out better than just about anyone, including central bankers themselves, expected. Inflation has cooled significantly, with the Consumer Price Index down to 2.5 percent from a peak of 9.1 percent just two years ago. And even with the Fed’s policy interest rate at its highest level in more than two decades, consumer spending has held up and overall growth has continued to chug along.Fed officials are eager to keep it going. That is why all signals suggest that they will lower interest rates at the conclusion of their meeting on Wednesday — and the only real question is whether they will cut them by a typical quarter of a percentage point or by a half percentage point. They are also likely to forecast that they will lower interest rates further before the end of the year, perhaps predicting that they will cut them by a full point from their current 5.33 percent.But even as the Fed turns an important corner on its fight against inflation, real risks remain. And those center on the labor market.Unemployment has been slowly, but steadily, rising. Wage growth has been consistently slowing. Job openings have come down, and hiring rates have come down along with them. And while all of those developments are what the Fed wanted — the point of this exercise was to slow an overheated job market and prevent it from fueling future inflation — central bankers have been clear that they do not want to see it continue.“We do not seek or welcome further cooling in labor market conditions,” Jerome H. Powell, the Fed chair, said in his latest speech.Unemployment and Underemployment RiseThe jobless rate historically jumps during recessions.

    Notes: Unemployment is the share of people actively looking for work; underemployment also includes people who are no longer actively looking and those who work part time but would prefer full-time jobs. Seasonally adjusted.Source: Bureau of Labor StatisticsBy The New York TimesWage Growth Is Cooling SteadilyAfter spiking in 2022, wage gains for rank-and-file workers have been coming down.

    .dw-chart-subhed {
    line-height: 1;
    margin-bottom: 6px;
    font-family: nyt-franklin;
    color: #121212;
    font-size: 15px;
    font-weight: 700;
    }

    Year-over-year change in average hourly earnings
    Note: Data is for production and nonsupervisory employees and is not seasonally adjusted.Source: Bureau of Labor StatisticsBy The New York TimesJob Openings Fall, Just as More People Look for ThemAfter years in which jobs were much more plentiful than available workers, that ratio is on the cusp of flipping.

    Data are seasonally adjusted.Source: The Bureau of Labor StatistticsBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

  • 138 Shares189 Views

    in Economy

    Why Low Layoff Numbers Don’t Mean the Labor Market Is Strong

    by

    Past economic cycles show that unemployment starts to tick up ahead of a recession, with wide-scale layoffs coming only later.As job growth has slowed and unemployment has crept up, some economists have pointed to a sign of confidence among employers: They are, for the most part, holding on to their existing workers.Despite headline-grabbing job cuts at a few big companies, overall layoffs remain below their levels during the strong economy before the pandemic. Applications for unemployment benefits, which drifted up in the spring and summer, have recently been falling.But past recessions suggest that layoff data alone should not offer much comfort about the labor market. Historically, job cuts have come only once an economic downturn was well underway.

    .dw-chart-subhed {
    line-height: 1;
    margin-bottom: 6px;
    font-family: nyt-franklin;
    color: #121212;
    font-size: 15px;
    font-weight: 700;
    }

    Layoffs per month
    Data is seasonally adjusted.Source: Bureau of Labor StatisticsBy The New York TimesThe Great Recession, for example, officially began at the end of 2007, after the bursting of the housing bubble and the ensuing mortgage crisis. The unemployment rate began rising in early 2008. But it was not until late 2008 — after the collapse of Lehman Brothers and the onset of a global financial crisis — that employers began cutting jobs in earnest.The milder recession in 2001 offers an even clearer example. The unemployment rate rose steadily from 4.3 percent in May to 5.7 percent at the end of the year. But apart from a brief spike in the fall, layoffs hardly rose.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

  • 163 Shares119 Views

    in Economy

    Why the Fed’s Jackson Hole Confab Matters for Wall St. and the Economy

    by

    The Federal Reserve Bank of Kansas City’s annual conference in Wyoming gets a lot of buzz. Here’s why it matters for Wall Street and the economy.Anyone who has flipped through newspapers or business television channels this week might have noticed two words on repeat: Jackson Hole.They refer to the premier central banking conference of the year, which is held late each August at the Jackson Lake Lodge in Grand Teton National Park in Wyoming. This year’s conference kicks off Thursday and runs through Saturday.To the uninitiated, it might seem weird that what is arguably the most important economic event in the world is held in remote Wyoming, two time zones away from the Federal Reserve’s Washington-based Board of Governors and 1,047 miles from its host, the Kansas City Fed. And the symposium itself is hardly your average conference. Loafers cede to cowboy boots. Attendees snack on huckleberry pastries (or swill huckleberry drinks) while discussing the latest economic papers.But if Jackson Hole is a little bit incongruous, it is also unquestionably important, an invite-only gathering where paradigm-shaping research is presented and momentous policy shifts are announced. The event has long been an obsession on Wall Street.This year will be no exception. Jerome H. Powell, the Fed chair, is scheduled to speak Friday morning, and markets are waiting anxiously to parse his remarks for even the slightest hint about how much the Fed might cut interest rates at its meeting next month — and how quickly central bankers will reduce borrowing costs after that.Wondering how a monetary policy conference held at the tail end of August became such a big deal and why it has stayed that way? Curious whether this year’s Jackson Hole conference will matter for mortgage rates or job prospects?We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

  • 125 Shares169 Views

    in Economy

    What Kalamazoo (Yes, Kalamazoo) Reveals About the Nation’s Housing Crisis

    by

    A decade ago, the city — and all of Michigan — had too many houses. Now it has a shortage. The shift there explains today’s costly housing market in the rest of the country.For years, when Michigan politicians talked about the state’s housing problem, they were referring to a surplus: too many run-down houses, stripped of valuable copper, sitting empty and blighting neighborhoods. Now the message has flipped. In her State of the State address this year, Gov. Gretchen Whitmer lamented the housing shortage and landed one of her biggest applause lines with, “The rent is too damn high, and we don’t have enough damn housing. So our response is simple: ‘Build, baby, build!”If you want to know what the housing crisis for middle-income Americans looks like in 2024, spend some time in Michigan. The surplus-to-shortage whipsaw here is a mitten-shaped miniature of what the entire country has gone through.I’ve been writing about housing and the economy for two decades, and have watched as the nation’s housing market has made the journey from boom to bust to deficit, seemingly without pausing for a normal middle. There are lots of reasons this happened, but they center on a big one: the late-2000s housing bust, which the country has never fully recovered from. Or as Ali Wolf, chief economist at Zonda, a data and consulting firm, put it: “The Great Recession broke the U.S. housing market.”At first, rapidly rising housing costs seemed like a regional problem. It made sense that places like San Francisco, which was already expensive, filled with well-paid tech workers and hamstrung by stringent building regulations, would be in crisis. Much of the rest of the country was still affordable, however, so high-cost “superstar cities” were seen as an exception instead of a warning.Now California’s problem is everywhere. Double-income couples with good jobs are priced out of homeownership in Spokane, Wash. Homeless encampments sprawl in Phoenix. The rent is too damn high in Kalamazoo.The housing crisis has moved from blue states to red states, and large metro areas to rural towns. In a time of extreme polarization, the too-high cost of housing and its attendant social problems are among the few things Americans truly share. That and a growing rage about the country’s inability to fix it.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

  • 113 Shares199 Views

    in Economy

    Stock Markets Signal Recession Fears. Here’s the Economic Outlook.

    by

    The economy has repeatedly defied predictions of a downturn since the pandemic recovery began. Now signs of strength contend with shakier readings.The U.S. economy has spent three years defying expectations. It emerged from the pandemic shock more quickly and more powerfully than many experts envisioned. It proved resilient in the face of both inflation and the higher interest rates the Federal Reserve used to combat it. The prospect many forecasters once considered imminent — a recession — looked increasingly like a false alarm.Until now.An unexpectedly weak jobs report on Friday — showing slower hiring in July, and a surprising jump in unemployment — triggered a sell-off in the stock market as investors worried that an economic downturn might be underway after all. By Monday, that decline had turned into a rout, with financial markets tumbling around the world.

    .dw-chart-subhed {
    line-height: 1;
    margin-bottom: 6px;
    font-family: nyt-franklin;
    color: #121212;
    font-size: 15px;
    font-weight: 700;
    }

    The number of jobs added in July was the second smallest monthly gain in years.
    Note: Data is seasonally adjustedSource: Bureau of Labor StatisticsBy The New York Times

    .dw-chart-subhed {
    line-height: 1;
    margin-bottom: 6px;
    font-family: nyt-franklin;
    color: #121212;
    font-size: 15px;
    font-weight: 700;
    }

    The unemployment rate in July rose to the highest level since October 2021.
    Note: Data is seasonally adjustedSource: Bureau of Labor StatisticsBy The New York TimesSome economists said investors were overreacting to one weak but hardly disastrous report, since many indicators show the economy on fundamentally firm footing.But they said there were also reasons to worry. Historically, increases in joblessness like the one in July — the unemployment rate rose to 4.3 percent, the highest since 2021 — have been a reliable indicator of a recession. And even without that precedent, there has been evidence that the labor market is weakening.

    .dw-chart-subhed {
    line-height: 1;
    margin-bottom: 6px;
    font-family: nyt-franklin;
    color: #121212;
    font-size: 15px;
    font-weight: 700;
    }

    The Sahm Rule indicator suggests a recession might have already begun.
    Data is seasonally adjusted and shows the change in the U.S. unemployment rate compared with the low point in the previous 12 months. All calculations based on three-month moving average.Source: Federal Reserve Bank of St. LouisBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More