The Definition of a Recession

Are we in a recession?

The S&P 500 (even with yesterday’s huge bump) is still down about 12%
from the early July highs.

But… let’s back up. What is a recession? Is it characterized by a drop
in the stock market? Should it be?

If a bunch of wealthy corporations get wealthier, and a your 401(k)
account gets a bump, does that mean we’re NOT in a recession?

I’ll give you two definitions of a recession that I think will help clear
up any confusion.

Some of you might be thinking, “wait, doesn’t the Federal Government have
an official definition of recession?”

Yes – they do. The government defines a recession as two consecutive
quarters of negative GDP growth. And that’s helpful if you’re a pencil
pusher in the Bureau of Labor and Statistics, but it’s probably not very
informative or useful if you’re an average American. GDP can be
fudged.

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