What defines a recession?

July’s US GDP release started a confusing and curious debate about what a recession actually is. The -0.9% growth reading for Q2 would meet the generally accepted definition of a recession, or two consecutive quarters of negative GDP growth. For some reason, people wanted to cite inventory drawdowns or a low unemployment rate or declining inflation or whatever else to suggest that we’re not in a recession because the current environment is unique. The past six months have been an anomaly, but this argument is pretty much pointless. GDP has declined for two straight quarters and that’s not a sign of a healthy economy. Excelsior will watch the Q3 reading, which can tell us about the direction in which the economy is going!