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2nd Quarter GDP Is Negative… Are We In A Recession?

August 1, 2022 by Paul Myers, Myers Capital Management

Last week the Department of Commerce released their first estimate of 2nd Quarter GDP and they reported the economy contracted .9%. JP Morgan, one of the Portfolio Strategists we utilize for client accounts, in their weekly market recap today gave their perspective about what is behind the numbers and whether this means we are already in a recession…

Real GDP fell 0.9% in the second quarter, marking the U.S. economy’s second straight quarter of decline. Weakness was broad based with slowdowns in inventory rebuilding, residential and non-residential construction and capital spending. This was marginally offset by gains in consumer spending and trade; however, with higher inflation eroding Americans’ purchasing power, higher mortgage rates slowing down the housing market and a higher US dollar hurting exports, growth is likely to stay subdued this year.

While two consecutive quarters of negative GDP growth may lead some to jump to the term “recession”, we are not there yet according to the definition used by the National Bureau of Economic Research (NBER), the de facto scorekeepers of U.S. recessions. NBER’s definition is much broader, encompassing declines in employment, industrial production, household income and trade. Take employment as the prime example here. In the second quarter, we saw average non farm payroll growth of 375K a month while the unemployment rate held at 3.6%. This strong of a labor market seems to contradict NBER’s definition. However, it will be important to monitor the labor market in the second half of 2022 to look for any signs of deterioration and the possible start of a recession.


While the gloomy GDP print will reinforce pessimism concerning the health of the U.S. economy, it does present a slight silver lining. The growth slowdown in the first half of 2022 shows that the Fed’s aggressive hiking cycle is delivering on its intended consequences – higher rates are slowing demand and growth, which should help alleviate some inflationary pressure in the second half of 2022.

Filed Under: Myers Cap Post

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The Myers Cap Post

  • Investing Is Hard
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  • 2nd Quarter GDP Is Negative… Are We In A Recession?
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  • Clark Capital Quarterly Economic and Market Review and Outlook
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  • Revisiting Bonds: The Interest Rate Conundrum
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Myers Capital Management, Inc. (“MCMI”) is a registered investment adviser located in Abington, PA. MCMI’s website is limited to disseminating general information about its advisory services and access to additional investment-related information, publications, and links. Accordingly, the publication of MCMI’s website on the Internet should not be construed by any consumer or prospective client as MCMI’s general solicitation to effect or attempt to effect transactions in securities or the rendering of personalized investment advice for compensation. We do not collect personally identifiable information about you when you visit our website unless you voluntarily provide it by sending us an email or other electronic communication(s). If you choose to share with us personal information, we will retain it in our electronic communications archive. Any subsequent, direct communication by MCMI with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. MCMI does not take any responsibility, representations, or warranties regarding the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, including website links. All such information is provided solely for convenience, guidance, and informational purposes only, and all users should be guided accordingly. Investments involve risk and, unless otherwise stated, are not guaranteed. This website and information are not intended to provide investment, tax, or legal advice and no warranties are implied. Before implementing any strategy, consult with a qualified financial adviser and/or tax professional. Insurance products and services are offered and sold through Myers Capital Management, Inc., and individually licensed and appointed insurance agents. For information about MCMI, please refer to the SEC’s investment adviser public information website at www.adviserinfo.sec.gov or upon written request from Myers Capital Management, Inc. No product or service is offered or will be sold in any jurisdiction in which such offer or solicitation, purchase, or sale would be unlawful under the securities laws of such jurisdiction. This web site is intended to be made available only to individuals in the United States, and the information on the web site is only for such persons. • Copyright Myers Capital Management, Inc.
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