CHARLOTTE, N.C. — The U.S. Department of Commerce reported that the national Gross Domestic Product (GDP) fell for the second quarter in a row, and that has a lot of people asking if we are in a recession.
First, let's take a look at what the GDP means. Generally, it measures the monetary value of goods and services produced in a country in a given time period, such as a fiscal quarter.
This week it was reported that the GDP fell at an annual rate of .9 percent in the second quarter on the heels of another drop in the first quarter.
Many people think this means we are officially in a recession. So what does it mean to be in a recession, and is there a definition?
OUR SOURCES:
The National Bureau of Economic Research, known as the NBER, is a nonprofit research organization not affiliated with the Federal Government. It is tasked with determining when the U.S. Economy has entered a recession.
The NBER defines a recession as a significant decline in economic activity, spread across the economy, and lasting more than a few months.
"There are a number of different metrics they use to evaluate it, and they usually don’t officially classify it as a recession until after the fact," Von Nessen said.
Von Nessen tells us GDP is one factor the NBER looks at, and unemployment is another factor.
"Two negative consecutive quarters of GDP growth also bring with it bring a lot of negative attributes like high unemployment, and that’s not what we are seeing this year, and that’s why it’s hard to define if we are in a recession," Von Nessen said.
He also said the GDP is down because consumers are switching to in-person services instead of goods after buying-up goods, coming out of the peak of the pandemic.
"We saw a goods bubble, and now we are seeing that trend reverse themselves, and that was a major reason why we saw a decline in the second quarter," Von Nessen said.
Von Nessen tells us more experts will consider calling this a recession if we start to see an increase in job losses and a rise in the unemployment rate.
Contact Meghan Bragg at mbragg@wcnc.com and follow her on Facebook, Twitter and Instagram.
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