If This Is a Recession, It's a Pretty Weird One

If This Is a Recession, It's a Pretty Weird One ...

If there wasn't so much on the line, you might think that Americans talking so often about being in a recession had become a sort of loopy parlor game for the policymakers in-crowd.

From Europe's top regulators who say they'll certainly, certainly be in a deep recession in the near future to America's more open market observers and the Federal Reserve, you'll find someone to argue either side just as eloquently anywhere.

The reality is that the term "recession" has very precise definitions, and by these parameters, the US has been in a bit of a recession for some time now, and may slip deeper into one this fall.

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Thomas Samuelson, the senior investment officer at Vineyard Global Advisors, has stated that by all traditional estimates, a recession is at least in the air.

That doesn't mean that the market will never be able to define what a recession is like, especially when it comes to phenomena that are completely unprecedented, such as a two-year-plus epidemic, record low unemployment, and 40-year high inflation.

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"Some are claiming that this time is different, pointing to the robust labor market and rising wages as evidence that we are not in a recession," Samuelson said.

The market and its regulators must pay close attention to certain criteria in order to avoid a recession and all of the policymaking and safeguards that come with it.

"If we are going to avoid a recession, the average bear market decline is 25% over a 7-month period, which we hit at the June 17th low of this year," Samuelson said. "We would generally go back and retest the June lows, which is a 14% decline from today's close."

Mayra Rodriguez Valladares, the managing partner of MRV Associates, a financial consulting and research firm, agreed that the future may be less clear as America enters an uncertain autumn.

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After two consecutive quarters of declining GDP growth, Samuelson said that while "the jury is still out on whether we will have a recession," the National Bureau of Economic Research (NBER) has always declared one.

"It's also possible that the recession will be milder than expected due to the robust labor market and the Fed's apparent intention to maintain the unemployment rate at the low 4.0% level, vs. 3.5% currently," he said.

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