Two Bad Quarters Do Not a Recession Make?

Yikes. Now we have two quarters in a row of shrinkage in the gross domestic product. That has long spelled a recession.

But economists and investment strategists were quick to point out Thursday, as the GDP news broke, the two-quarters standard is a very rough rule of thumb and is insufficient to signal a downturn. GDP fell at a 0.9% annual rate in the June-ending quarter, following the March-ending quarter’s 1.6% slide.

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Indeed, the National Bureau of Economic Research’s business cycle dating committee is the decider of when a recession is here. In addition to GDP, which may fluctuate due to exogenous factors, the NBER panel weighs a welter of other metrics, such as employment trends and consumer outlays.

Reasons to doubt that the GDP decreases in the first and second quarters mean a recession is upon us now:

One-time statistical quirks. In an investor note, Cliff Hodge, CIO for Cornerstone Wealth, blamed the first quarter’s drop to an import surge that ballooned the trade deficit, which offset domestic economic growth. In the second period, he went on, “a slowdown in inventory accumulation tipped GDP growth into the red.” As a result, he said, “it’s really difficult to call what we’re experiencing right now a recession.”

Jobs. Bill Adams, chief economist for Comerica Bank, wrote that “with solid job growth in the first half of the year, the economy didn’t look like it was in a recession.” Total nonfarm payroll employment increased by 372,000 in June, and the jobless rate remained at 3.6%.

Consumers. They are still opening their wallets to buy stuff. “We are not in recession,” said by Jeffrey Roach, chief economist for LPL Financial. “Consumer spending was too strong to raise any recession signals.” Consumer expenditures have risen continuously this year, with the last monthly rise slower than earlier in 2022 but still positive (0.2% in May, versus 0.6% in April).

All that said, no one denies that high inflation, the Ukraine war and all of the rest of humanity’s afflictions lately won’t take a toll up ahead. As Comerica’s Adams put the matter, “While it seems inaccurate to think of the first half of the year as a recession, the outlook for the second half and into 2023 is dicier.”

After a nearly eight-month search, the North Dakota State Retirement and Investment Office has named Chad Roberts as its deputy executive director and chief retirement officer, effective July 11. He succeeds Jan Murtha, who was promoted to executive director last November.

According to North Dakota RIO, Roberts has more than 25 years of experience serving in government administrative and leadership roles. He was most recently deputy county administrator of Polk County, Wisconsin, serving as chief financial officer and human resource director in addition to overseeing IT and other central government services. His duties included budget creation and maintenance, managing human resources and benefits administration and helping implement a long-term strategic direction of the organization.

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Prior to working as a county executive, Roberts was agency head for two law enforcement agencies following a career in law enforcement. He received a B.S. in accounting from the University of Alabama at Birmingham, where he is currently completing his master’s in accounting. He has also served as a board member of the Wisconsin State Sheriff and Deputy Sheriff’s Association.

“Roberts brings with him a strong background in finance, project management, human resource and change initiatives,” Murtha said in a statement. “RIO will benefit from his experience and perspective as we progress with our pension administration modernization project and develop our talent management program for the agency.”

North Dakota RIO was established in 1989 to administer the activities of the State Investment Board and the Teachers’ Fund for Retirement.