“The technical definition is not two negative quarters,” Deese said. “Technically, the definition is the NBER’s definition.”
Yellen said Sunday that she’d be amazed if the NBER calls this a recession, given the state of the labor market. “When you’re creating almost 400,000 jobs a month, that is not a recession,” she said Sunday on NBC’s “Meet The Press.”
The first-quarter drop in GDP was largely due to a widening trade deficit that was spurred by a wave of imports, and consumer spending continued alongside job growth in that period.
“It is entirely possible that we see a negative GDP print, marking a technical recession (GDP also fell in the first quarter), even as the US economy is still showing underlying strength and inflation is accelerating,” Wells Fargo strategist Erik Nelson wrote in a research note on Friday.
If a “technical recession” doesn’t immediately mean a formal one, the data could still soon turn sour. The Federal Reserve is poised to once again hike rates by an historically large 75 basis points this week, putting fresh pressure on growth in a bid to stem price increases.
“You don’t see any of the signs now. A recession is a broad-based contraction that affects many sectors of the economy. We just don’t have that,” Yellen said Sunday. “But inflation is way too high. And, you know, the Fed is charged with putting in place policies that will bring inflation down. And I expect them to be successful.”
This article was provided by Bloomberg News.