Less than a month ago, Talent Talk predicted that the United States would soon enter what we called a “definitional recession,” i.e., two consecutive quarters of negative GDP growth. Since then, I have learned that this is not the official definition of a recession, which made me wonder what is going on?

I remember my father telling me that a recession is when your neighbor loses their job, and a depression is when you lose yours. It turns out that was an old joke, but Pops may have been on to something. How many of you know a neighbor who has lost their job?

For answers, I turned to an old friend, Craig Phillips, Managing Partner at investment management firm Client 1^st Advisory Group. Phillips noted many of the same things Talent Talk has been saying — notably, that the US job market remains strong, much stronger than you would expect in a recessionary period.

His conclusion? “It appears to be an odd recession. In the past, rising unemployment and tighter Fed policy combined to reduce demand, and prices fell. That isn’t happening now, at least not yet.” Phillips continued, “Many employers still want to hire and can’t find qualified workers. Unemployment at 3.6% is only 0.1% above the 50-year low of February 2020.”

It is too early to draw conclusions, but this could be a signal that if the National Bureau of Economic Research (NBER) declares that we were in a recession ­— believe it or not, that could take up to a year — it also may note that it was one of the mildest on record.

Phillips said his firm also keeps a close eye on core inflation, not the headline number, which includes volatile components like food and energy. While still far too high for the Fed and the economy, the core inflation rate peaked in March 2022 and dropped each of the following three months. When July’s number is announced on August 10, look to see if we have a fourth consecutive lower monthly number, or a reversal.

About the author

Paul Sturgeon is CEO of KLA Industries, a national search firm specializing in plastics, packaging, and polymer technology. If you have a topic you would like to see discussed, a company that is growing, or other ideas for this blog, e-mail Sturgeon at [email protected].