The Rolling Recession: An In-depth Analysis of Its Implications for the American Economy

Experts Discuss the Possibility of a "Rolling Recession" in the US

Introduction

The possibility of a rolling recession in the US has been a topic of discussion among economists.

A rolling recession is defined as a series of mild contractions in the economy with an asynchronous cadence, avoiding a full-blown recession.

In this article, we will examine the definition of a rolling recession, the current economic indicators in the US, the views of economists on the US economy, and the thoughts of Merrick Investments' Vice President of Macro Research, Nick Reece, on the topic.

Definition of a Rolling Recession:

• Nick Reece, Vice President of Macro Research at Merrick Investments, suggests that the US may already be in a rolling recession.
• He defines it as a series of mild contractions in macroeconomic activity, such as employment, production, income, and spending, but with a different pace that avoids a true recession.

Current Economic Indicators in the US

Despite a real GDP growth of 2.1% in 2022 and low employment levels since 1969, the US economy is facing challenges due to high inflation rates of 6.5%.

Industries such as manufacturing, technology, and housing have shown signs of slowing down, leading to a decrease in consumer spending and a slowdown in corporate earnings growth.

Declaration of a Recession

The National Bureau of Economic Research (NBER) has yet to declare a recession, despite the fact that the economy meets its own definition of a "significant decline in economic activity spread across the economy and lasting for more than a few months.

Some experts, including economists from Charles Schwab, believe that the US may already be in a rolling recession.

Views of Economists on the US Economy

Charles Schwab economists believe that the goods sector of the economy has experienced a growth surge due to massive fiscal stimulus, but has since decelerated sharply. The current debate is whether this rolling recession can continue without an official declaration of a recession by the NBER.

Sung Won Sohn, Chief Economist at SS Economics, also agrees with the idea of a rolling recession that is already underway.

He acknowledges that the US must prepare for a rolling recession, but also has a more optimistic outlook, stating that the worst of the volatile economy may have passed.

Nick Reece's Thoughts on a Rolling Recession

Nick Reece believes that the risk of an economic downturn remains high and classic warning signs are still present. He notes that factors such as the reopening of China, improvement in Europe, US fiscal stimulus, disinflation, and a tight labor market could all play a role in the outcome.

Although Reece does not have strong evidence that the US is in a recession, he mentions that an earnings contraction is still possible, and a Federal Reserve pause combined with a soft landing could be positive for the market outlook.

Conclusion

Economists and experts have differing views on the possibility of a rolling recession in the US, but all agree that the economy faces challenges and risks. The situation