Periodically the Bureau of Economic Analysis (BEA.gov) counts both the
Gross Domestic Product (GDP) and the
Gross Domestic Income (GDI).
In theory they are supposed to be equal, but they never quite are, (and in recent months the difference between them ahs gotten largish, causing pocket-protector type econ nerds to whisper and talk among themselves.
.
.
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So, if this is just nerd stuff, why bother mentioning it, (normally the path of the planets and Japanese moon landings are about as nerdy as we get in Hannityland),
wel,l because GDI just turned negative on a Y-oY basis.
This is not just a recession indicator since normally GDI = GDP then normally this is a (partial) definition of recession.
Anyway. if we just call it an “indicator,” we reduce the importance.
Nonetheless, when this “indicator” becomes negative, it has correctly predicted every single recession since WW2 and has never given a false positive. It just turned negative.
Here is a “zoomed-in” look at the last 10 years of that chart.
As you can see the difference between GDP and GDI has grown quite large, (and they are supposed to be equal.)
The econ nerds I sometimes hang out with think it has something to do with people spending out of savings and spending out of money market accounts (instead of spending out of income earned from work, from investments etc.), but no one seems to know for sure why they are suddenly so different.
Inflation is determined primarily (some arch conservatives say “exclusively,”) by what the Fed does in response to the deficit.
In both of those views
Congressional borrow-and-spend can have a number of different impacts.
The primary (some would say “exclusive”), determinant of inflation is how the Fed responds.
*That outlook is based on the Federal Reserve’s “aggressive” monetary tightening since March 2022, Ibrahim said. Interest rates are now the highest they’ve been since 2001, a level economists have long-warned could overtighten financial conditions and push the US into a recession. *
Economists have also said that the full effects of Fed rate hikes are still working their way through the economy, though signs of damage of already beginning to bubble to the surface. Auto loan delinquencies are rising, Ibrahim noted, a signal that consumers are falling behind their debt payments as inflation bites and borrowing costs rise.
with the media how it is, there will never be a “recession” under a democrat pres. despite all indicators. we saw proof of that with the previous Biden recession
