Media Statement: Assessing the GDP numbers and what it means

Media Statement: Assessing the GDP numbers and what it means

In The News

Media Statement: Assessing the GDP numbers and what it means

Today, the U.S. Bureau of Economic Analysis announced that in the second quarter of 2022, real Gross Domestic Product (GDP) declined by 0.9%. That marks two consecutive quarters of negative growth, a barometer of economic health that economists typically use to define a recession.

The Georgia Center for Opportunity’s (GCO) take:
“It’s now official. We’re having stagflation.

There has never been a time when the Business Cycle Dating Committee did not declare a recession when real GDP declined for two consecutive quarters since the availability of quarterly GDP data,” said Erik Randolph, GCO’s director of research. “In fact, the opposite is true. There have been two times, since the availability of the data, without two consecutive real GDP declines when the Committee declared them to be recessions. This happened with their declared 1960 and 2001 recessions. Who knows if and when the NBER Committee will declare whether we’re already in a recession, and for how long. But if it doesn’t declare so despite the real GDP data, it would be unprecedented and require a good explanation. In the meantime, GDP gives perhaps the broadest measure of economic activity, giving a strong signal that we’re in a recession until such time economists work out their various methodologies to affirm or deny.”

Georgia non-adjusted unemployment numbers increase as economy dips into possible recession

Georgia non-adjusted unemployment numbers increase as economy dips into possible recession

In The News

Georgia non-adjusted unemployment numbers increase as economy dips into possible recession

 A week after reporting Georgia’s June seasonally adjusted unemployment rate hit an all-time low, new numbers show the state’s unemployment rate increased.

Last week, officials said Georgia’s preliminary seasonally adjusted unemployment rate for June 2022 was 2.9%, below the national rate of 3.6%. The state’s rate decreased from 5.4% in June 2021…

“There has never been a time when the Business Cycle Dating Committee did not declare a recession when real GDP declined for two consecutive quarters since the availability of quarterly GDP data,” Erik Randolph, director of research for the Georgia Center for Opportunity (GCO), said in a statement. “In fact, the opposite is true. There have been two times, since the availability of the data, without two consecutive real GDP declines when the Committee declared them to be recessions. This happened with their declared 1960 and 2001 recessions.

“Who knows if and when the NBER Committee will declare whether we’re already in a recession, and for how long,” Randolph added. “But if it doesn’t declare so despite the real GDP data, it would be unprecedented and require a good explanation. In the meantime, GDP gives perhaps the broadest measure of economic activity, giving a strong signal that we’re in a recession until such time economists work out their various methodologies to affirm or deny.”

Georgia non-adjusted unemployment numbers increase as economy dips into possible recession

Biden denies recession after GDP decline, but economists say otherwise

In The News

Biden denies recession after GDP decline, but economists say otherwise

The U.S. economy has shrunk for six consecutive months, according to federal data released Thursday. which led many economists to declare a recession. But the Biden administration is pushing back, arguing the U.S. is not in a recession after all…

“There has never been a time when the Business Cycle Dating Committee did not declare a recession when real GDP declined for two consecutive quarters since the availability of quarterly GDP data,” said Erik Randolph, the Georgia Center for Opportunity’s director of research. “In fact, the opposite is true. There have been two times, since the availability of the data, without two consecutive real GDP declines when the Committee declared them to be recessions. This happened with their declared 1960 and 2001 recessions.”

Randolph said not declaring a recession this time would be “unprecedented.”

“Who knows if and when the NBER Committee will declare whether we’re already in a recession, and for how long,” he added. “But if it doesn’t declare so despite the real GDP data, it would be unprecedented and require a good explanation. In the meantime, GDP gives perhaps the broadest measure of economic activity, giving a strong signal that we’re in a recession until such time economists work out their various methodologies to affirm or deny.”

 
Georgia non-adjusted unemployment numbers increase as economy dips into possible recession

Amid Recession Fears, Economically Free States Continue to Outperform

In The News

Amid Recession Fears, Economically Free States Continue to Outperform

 

Florida Gov. Ron DeSantis recently responded to questions about California Gov. Gavin Newsom’s ads airing in Florida, “It’s almost hard to drive people out of a place like California given all their natural advantages, and yet they are finding a way to do it.” He noted that California is hemorrhaging its population because of bad progressive economic policies so that they could be more free

Florida ranks third in the nation for economic freedom, according to the Fraser Institute. And California ranks second to last…

What the June inflation numbers mean for the poor

What the June inflation numbers mean for the poor

rising prices for gas

What the June inflation numbers mean for the poor

Key Points

  • BLS reports, some of the biggest increases in prices were soon for essentials like gas for your car and groceries for your kitchen table.
  • A new price floor has been established.
  • A way forward involves, curtail federal deficit spending and adopting supply-side economic policies. 

The inflationary environment in the U.S. and around the world continues to go from bad to worse. On July 13, the U.S. Bureau of Labor statistics announced that in June the Consumer Price Index (CPI) rose by 1.3%, not seasonally adjusted. That means, year over year, the CPI is now up 9.1%, which is the fastest pace of inflation in over four decades.

As the BLS reports, some of the biggest increases in prices were soon for essentials like gas for your car and groceries for your kitchen table: 

“The increase was broad-based, with the indexes for gasoline, shelter, and food being the largest contributors. The energy index rose 7.5 percent over the month and contributed nearly half of the all items increase, with the gasoline index rising 11.2 percent and the other major component indexes also rising. The food index rose 1.0 percent in June, as did the food at home index.”

 

The poor are hit hardest

The sad reality is that inflation shows few, if any, signs of lessening anytime soon. As we’ve said so many times before, the hardest hit are the poorest among us. 

For example, a recent survey revealed the alarming truth that some families are skipping meals to deal with raging inflation. While inflation is inconvenient for the upper middle class and wealthy and concerning for the middle class, it’s downright devastating for the working class and poor.

Meanwhile, wage increases are lagging behind price increases. People are falling further and further behind.

 

A new floor for prices

What’s even more devastating than spiking inflation month-in, month-out is the new price level. As the Georgia Center for Opportunity’s director of research Erik Randolph points out, inflation is only part of the equation. We should also be focusing on the price level, which is defined as the new “floor” for the prices we all pay in the economy. 

A gallon of milk might’ve cost $2.99 a year ago, for example, but now it’s $3.99. That new price is not going down, even as inflation eventually abates. A new price floor has been established and it becomes ingrained in our minds that a gallon of milk simply costs $4.

Simply put, leaving the price level elevated means we are leaving the economically disadvantaged further behind, exacerbating the economic divide in our nation.

 

A way forward

There are a number of public policy prescriptions that Randolph suggests for curbing inflation:

  • Curtail federal deficit spending.
  • Adopt supply-side economic policies, ones that cut red tape to reduce unnecessary government regulations, making it easier for entrepreneurs to start and expand businesses and for investors to take risks investing in business.

In our communities, initiatives such as BETTER WORK in the Atlanta and Columbus metro areas are also foundational to helping people find meaningful work, work that pays a living wage to better cope with highly inflationary times.