The Recession Has Begun… Or Maybe Not

I wanted to follow up about what I discussed in last week’s video: the GDP number that came out on Thursday. It showed another quarter of negative growth, which leads to ongoing conversation that the recession has started. I wanted to add my thoughts and give you a few bits of perspective.

Economic Slowdown is Happening

It certainly appears that things are slowing economically. That’s what we would expect with the Fed doing everything that they are doing right now. There is no question that the widely-accepted definition of a recession is two “down” quarters in a row. So, it looks like we are in a recession right now.

A Few Things You Need to Know

But it’s really important to understand a few things.

First, we need to keep in mind that the number we got on Thursday last week is the preliminary read of GDP. What that means is that it is going to be revised two more times over the next few months. They do the initial read, with two potential revisions after review.

There is only one entity that determines the official read: the National Bureau of Economic Research (NBER). They are obviously looking at the GDP, as well as duration, the contraction, and more. This group is made up of 51 people including economists, businessmen, and more. You can look up NBER to learn more about how it works. This group is the one that officially determines whether we are in recession.

It’s noteworthy that there hasn’t been a time in history where the final read of the 2nd quarter GDP came out as a negative read and the NBER didn’t say that we were in a recession. So, we’ll see what happens.

Other things to keep an eye on include unemployment and additional data that will be coming through in the coming weeks and months.

We Aren’t Technically in a Recession… Yet

Right now, we aren’t technically in a recession yet. But the economy is definitely shrinking and people are noticing the pinch in their home budgets. So, the changes are real, even despite the official determination of a recession.

Regardless of what is happening in the economy, I’m always here to help you find the best mortgage options for buying or refinancing a home. Reach out to me any time for personalized recommendations.