Discussion in 'Economics' started by dividend, Nov 12, 2006.

  1. A recession is defined in macroeconomics as a decline in a country's real Gross Domestic Product (GDP) for two or more successive quarters of a year (equivalently, two consecutive quarters of negative economic growth). [wikipedia]

    According to DJ the GDP was:

    Gross Domestic Product 3Q 2Q 1Q
    Overall GDP Growth +1.6% +2.6% +5.6%
    PCE Price Index +2.5% +4.0% +2.0%

    5.6 -> 2.6 -> 1.6

    Does that mean the US is in a recession?
    3Q data was from Oct.
  2. GDP Growth in real terms: No.
    GDP Growth in nominal terms: Yes.
  3. thanks
  4. Tuneman


    I dont know who wrote that definition, I thought it had to do with the GDP in relation to potential output. That is what is important.
  5. empee


    i think the negative growth didn't mean comparatively but absolutely, meaning it would have to be a negative number for two quarters.
  6. The figures for overall GDP Growth are in real terms. Nominal GDP growth for 3Q is 1.6%+2.5%=4.1%.

    Two quarters with real GDP growth under 0% would bring the economy into a recession according to the above definition.
  7. gotcha.. it makes sense now. thank you.