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How Recession 2022 Will It Be Different From 2008?
During the Covid-19, NBER had declared a 2 month pandemic recession for Feb-April 2020 but it was seen as part of a worldwide freeze undergone by almost all the nations.
However, in July 2022, following a 2nd consecutive quarter of shrinking GDP, NBER said, “There is no fixed rule about what measures contribute information to the process or how they are weighted in our decisions.”
2008 recession
2008 recession remained on top with all phases of the shrinking economic activities in the nation, mainly the bust of the subprime mortgage, followed by fall in private consumption and entering the severe unemployment front.
First, 63k jobs were cut in Feb 2008, and on Oct 1, the Bureau of Economic Analysis reported an additional loss of 156,000 jobs in September.
In Nov 2008, the job cuts reached 533,000, the largest single-month loss in 34 years and by March 2009, the figure reached 5.1 million jobs.
Experts differ on 2022 recession
Unlike any of the above factors that worsened the 2008 recession, experts argue that the US market is now robust with cash and higher employment figures. No spending squeeze is seen, rather the Fed has announced higher rates of interest.
Higher unemployment, shrinking economic output, and lower consumer spending form the cycle of recession but in 2022, unemployment is still at a record low of 3.6% in June – the lowest since Feb 2020.
To call it a recession, NBER prefers to wait for more than 1 or 2 indicators showing weakness and the decline being significant and lasting more than a few months.
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