{"id":41718,"date":"2022-06-08T09:36:36","date_gmt":"2022-06-08T09:36:36","guid":{"rendered":"https:\/\/harchi90.com\/timing-a-recession-vs-timing-the-stock-market\/"},"modified":"2022-06-08T09:36:36","modified_gmt":"2022-06-08T09:36:36","slug":"timing-a-recession-vs-timing-the-stock-market","status":"publish","type":"post","link":"https:\/\/harchi90.com\/timing-a-recession-vs-timing-the-stock-market\/","title":{"rendered":"Timing a Recession vs. Timing the Stock Market"},"content":{"rendered":"
The pandemic-induced recession is going to go down as one of the most bizarre economic contractions in history.<\/p>\n
The National Bureau of Economic Research didn’t officially recognize the start of the recession that began in February 2020 until June of that year.<\/p>\n
No one actually needed economic research to tell us we experienced a recession. Everyone knew the same day the NBA postponed its season, Tom Hanks contracted Covid and schools across the country were closed that a recession was at our doorstep.<\/p>\n
It’s not always going to be that easy.<\/p>\n
For starters, the definition of a recession itself is difficult to pin down. Some people claim its two consecutive negative GDP prints.<\/p>\n
NBER has its own definition:<\/p>\n
The NBER’s traditional definition of a recession is that it is a significant decline in economic activity that is spread across the economy and that lasts more than a few months. The committee’s view is that while each of the three criteria \u2014 depth, diffusion, and duration \u2014 needs to be met individually to some degree, extreme conditions revealed by one criterion may partially offset weaker indications from another. <\/em><\/p>\n Economic data is not like the stock market. It’s not updated every single day. It can be difficult to pin down. It requires estimates, surveys, updates and adjustments.<\/p>\n The US economy is something like $ 25 trillion consisting of millions of workers and businesses. There are lots of moving pieces so it can be difficult to get a grasp on what’s going on in real-time.<\/p>\n For instance, there was a brief recession that began in January 1980. NBER officially called the January recession start date in June, just a month before the recession was over in July. By the time NBER made it official that the recession ended in July 1980, a new economic contraction was already starting in July 1981.<\/p>\n The recession that lasted from July 1981 until November 1982 wasn’t declared until January 1982.<\/p>\n The recession that began in the summer of 1990 wasn’t determined until the spring of 1991.<\/p>\n The March 2001 recession wasn’t officially called declared by NBER until November 2001, the month it ended.<\/p>\n The Great Financial Crisis recession started in December 2007. It wasn’t made official until December 2008, the same month Bernie Madoff’s Ponzi scheme finally came to light.<\/p>\n The interesting thing this time around is everyone – even Cardi B – seems to be predicting a recession right now.<\/p>\n