Plain English with Derek Thompson Why the Question "Are We in a Recession?" Is Impossible to Answer
Jul 29, 2022
Austan Goolsbee, an economics professor at the University of Chicago and former chair of the Council of Economic Advisers, dives into the complexities of assessing America's economic state. He discusses the latest GDP report and its unexpected implications amid a strong job market. Goolsbee also unpacks the difficulties in defining a recession, the impact of external events like the pandemic and the Ukraine crisis on supply chains, and how public perception often conflicts with economic realities.
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Conflicting Economic Signals
- The GDP dropped for two consecutive quarters, signaling a potential recession.
- However, the job market is booming, making it difficult to reconcile the two.
Housing Market Decline
- Residential investment crashed by 14% last quarter, significantly impacting GDP.
- This is a direct result of the Federal Reserve raising interest rates to combat inflation.
Supply Side Challenges
- Supply chain disruptions due to events like the war in Ukraine and COVID-19 lockdowns in China continue to challenge the U.S. economy.
- These supply shocks are contributing to persistent inflation.