Issue #43: I've got a recession obsession

Updated GDP numbers aren't due for a few more weeks, but the Bureau of Economic Analysis currently estimates a -4.8% decrease for the first quarter of 2020.

"It's pretty certain that, at some point in very near future after these numbers are confirmed, the NBER committee will have to call the shots and formally announce we are in a recession," Moser says, adding that'll likely be in July.

Because of this, it’s tough to say definitively that we are or are not in a recession. On one hand, because the data isn't nailed down and the committee hasn't officially said so, we're not in a recession yet. But on the other, because the committee often does retroactive calls, we probably are in a recession. (For context, the committee declared in December 2008 that the Great Recession had started in December 2007. Trippy.)

Martha Gimbel, manager of economic research at Schmidt Futures, told me the situation right now is bleak enough for some talking heads to make the leap anyway. They're not waiting for the committee, which is a big deal in itself.

"Many economists are talking about us being in a recession despite the fact that we have not yet seen the GDP fall for two quarters, because we do not yet have the data," Gimbel says. "That speaks to how bad this is."

Though the semantics might not matter to me personally, Moser said investors, business owners and politicians do pay close attention to the declaration. The committee is known for being extremely careful in making its decision, which can itself have serious effects on the economy.

"The announcement will make it crystal clear that this is the confirmed state of the economy, and that might shake markets a little bit," Moser says.

I looked it up, and on December 1, 2008 — the day the Great Recession was officially confirmed — the Dow slid 680 points. Shares of firms like Citigroup fell over 20%.

Moser says once we're definitely in a recession, businesses may change their outlook, shifting decisions to expand or stock up on inventory. The declaration could also trigger policy solutions like extended unemployment claim periods. Maybe it’s even a good time to talk to a financial advisor to get some tips for my personal life.

"There might be a really significant effect of having the certainty come July," Moser says.

(but please don't tell me you scrolled past all of my hard work)

We both are and are not in a recession right now, but come this summer we definitely will be. We’re basically just waiting on this NBER committee to step up and make it official.

The point at which a recession becomes a depression is much more vague. The NBER doesn’t define depressions or identify them. Generally, depressions are linked with a long period of high unemployment, Gimbel says.

Recent jobs numbers indicate “we are at depression-level unemployment,” Gimbel says. However, we probably shouldn’t talk about this being a depression until we’re definitely in a recession. Gotta DTR first.

via GIPHY

check out this crazy celebrity purchase

via Instagram

Playboi Carti is a new dad, but he’s not interested in driving a soccer-mom van. The rapper recently dropped $400,000 on a Rolls-Royce Cullinan SUV to cart around girlfriend Iggy Azalea and their weeks-old infant. The family car has leather seats, retractable sunroof, fold-down TVs and tray tables. Makes sense that it’s so fancy — you already know...

five things I'm loving online right now

send me cute pictures of your pets, please

CREDIT: ANNE STEVENS

Here are Midnight and Mocha, two economeowists hard at work on getting those updated GDP numbers.

Enough talk about the GDP. I need a margarita ASAP.

See you next week.

Julia

P.S. I got so many replies last issue about budgeting apps, which made me happy because I LOVE Dolla Scholla hollas. Scholar Christine said she likes You Need a Budget, which forces her to think about what her money has to do before she spends it — a proactive experience, not a reactive one. Scholar Katie also uses YNAB, which she describes as a “lifesaver” for setting her up on a budgeting journey pre-coronavirus. Meanwhile, Scholar Neal swears by SeedTime; Scholar Cilla recommended Good Budget. Scholar William likes Moneydance, and Scholar Kent prefers EveryDollar. Lots of options!

P.P.S. Do you remember the last recession? How are you preparing for this one? Have you ever met a ghost? Distract me from the impending economic doom by emailing me at julia.glum@money.com or @SuperJulia.