BEA revision confirms no recession in 2022
September 27, 2024 — The NBER Business Cycle Dating Committee is the official arbiter of recessions in the US economy, even though most other countries use the rule of two consecutive quarters of negative GDP growth. Critics sometimes question this practice, arguing, first, that it unnecessarily delays the determination of the turning points and, second, that it substitutes the subjective judgment of a group of unelected elite professors for the objectivity of the two-quarters rule.
The case in favor of the NBER committee was well–illustrated yesterday by the quiet BEA release of revisions in the historical GDP series. In 2022, BEA had reported negative growth statistics for the first two quarters of that year. On this basis, some commentators trumpeted that the US was in recession. “The bottom line is that, with the announcement on July 28 of a two-quarter GDP decline, we can be highly confident that the US economy entered a recession early in 2022.” The NBER did not declare a recession. Virtually all other indicators that it looks at, at that time showed a continued expansion of the economy, most importantly the employment statistics, which continued to show a rate of job creation well in excess of the rise in the labor force. The same with industrial production.
In its September 26, 2024, news release, BEA revealed that its regular annual revisions had changed GDP growth for Q2 of 2022 from a small negative number to a small positive number. This vindicates the NBER, if any vindication was necessary.