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US economy crashes once more, Fuelling Recession Fears
Gross domestic product, a wide-ranging measure of economic activity, fell by 0.9% on an annualized basis from April through June. That decline marks a key symbolic threshold for the most commonly used — albeit unofficial — definition of a recession as two consecutive quarters of negative economic growth.
The hotly anticipated data release has taken on outsized significance as investors, policymakers and ordinary Americans seek some measure of clarity in the current muddled economic environment.
Although Thursday’s initial estimate marked a sharp drop from the 6.7% expansion the economy underwent in the second quarter of 2021, the White House has been adamant that the world’s largest economy, despite being buffeted by decades-high inflation and a cascade of supply shocks, remains fundamentally sound.
The administration even took the unusual step of publishing an explainer of sorts, maintaining that two consecutive quarters of economic contraction does not, in and of itself, constitute a recession. The White House posted a blog entry last week saying that in addition to GDP, data pertaining to the labor market, corporate and personal spending, production, and incomes all go into the official determination of a recession.
The nonprofit National Bureau of Economic Research is the official arbiter of recessions, and it is unlikely to render a verdict any time soon. The group’s Business Cycle Dating Committee typically weighs a plethora of statistics over a period of months before making a determination.
Economists say the biggest reason it would be premature to call a recession based on Thursday’s numbers is that the data can and probably will change. Subsequent revisions to first-quarter GDP figures, for instance, changed from an initial drop of 1.4% to 1.6%, and Thursday’s numbers are just the first of three estimates.
Adjustments are the norm rather than the exception, since the Commerce Department repeatedly refines its calculations as new information becomes available. About a third of initial GDP releases rely on statistical extrapolations and assumptions in the absence of hard data, according to the Federal Reserve Bank of San Francisco.
“These are typically single points in time, snapshots. It’s almost like looking at a balance sheet versus an income statement over a quarter,” said Eric Freedman, chief investment officer at US Bank Wealth Management.
“New information can emerge,” he said, and when it does, those variables change the outcome.
Sometimes, the differences between estimates are significant. Revisions to GDP in the fourth quarter of 2008, for example, revealed that economic activity actually plunged by an annualized -8.4%, indicating a much deeper recession than the initial estimate of -3.8% suggested.
Right now, the biggest smudge on the lens preventing economists from getting a clear picture is a buildup of inventories and a corresponding imbalance in the country’s usual trade flows.
“What you’re starting to see and hear a lot about right now is what’s happening with inventories… Inventories are an issue, both in terms of the mix of inventory retailers are holding as well as the amount,” Freedman said.
A rush to load up on goods during the previous two quarters was a miscalculation for companies like big-box stores. Walmart and Target have both told investors they expect to cut prices to move products. But from a macroeconomic perspective, some experts think those missteps imply that the economy in the first quarter was not as anemic as the drop in GDP might otherwise imply.
Anna Rathbun, chief investment officer at CBIZ Investment Advisory Services, suggested that the 1.6% contraction in first-quarter GDP was artificially low because businesses started stockpiling inventory in the final quarter of last year. This pulled forward economic activity that otherwise would have taken place in the early months of this year, she said.
“The fourth quarter, to me, was bloated a little bit,” Rathbun said. “Everyone was just hoarding things.”
In addition, when companies import more and export less, that dynamic weighs on GDP, said Jacob Kirkegaard, a senior fellow at the Peterson Institute for International Economics.
“It’s the value of production within the physical borders of the United States, so therefore if you have, hypothetically, exports that are flat and higher imports, then your trade deficit is rising. In that sense, a rising trade deficit subtracts from GDP,” he said, particularly when combined with wild swings in prices.
“When you have highly fluctuating commodity prices, and especially in periods of high inflation in general, then it can be misleading and, in my opinion, paint an overly negative view of where the economy is,” Kirkegaard said. “We have to be careful with saying the GDP number is the absolutely valid metric for economic well-being in the country.”
Federal Reserve Chairman Jerome Powell on Wednesday reiterated the importance of considering various key economic measures as the central bank determines future rate moves. However, Powell said the first read of a GDP report should be taken “with a grain of salt
The National Agency for the Prohibition of Trafficking Persons (NAPTIP) says it is proposing the establishment of a command in the Federal Capital Territory (FCT) to tackle cases of Violence against Persons (VAP).
The Director-General of the agency, Mrs Binta-Adamu Bello, disclosed this on Monday in Abuja during the 2024 stakeholder’s coordination meeting on implementation of the Violence Against Persons Prohibition (VAPP) Act 2015 and corresponding state laws.
The News Agency of Nigeria (NAN) reports that the meeting was supported by Ford Foundation to commemorate the first day of the 2024 Global 16 Days of Activism, an annual campaign to challenge violence against women and girls.
The NAPTIP boss said that the establishment of the FCT command would further solidify the agency’s commitment toward eradicating social menace, especially with the issue of Sexual and Gender-Based Violence (SGBV) in the nation’s capital.
According to the NAPTIP boss, it is expected that the command will enhance quicker response to SGBV cases, improve coordination among stakeholders, provide specialised support services for survivors and strengthen investigation and prosecution.
She said that the command would serve as a model for other states and strengthen stakeholders’ collective efforts to eradicate SGBV within the FCT, while inviting the stakeholders’ input and expertise in facilitating the move.
She said “I have strong conviction that we will leave here with renewed vision toward eradicating the ills associated with violence against persons and in turn, make the country safer and more habitable.
“It is gratifying to note that this meeting is holding on the first day of the Global 16 Days of Activism, which is an annual campaign to challenge violence against women and girls.
“The theme for this year is “Towards Beijing +30: Unite to End Violence against Women and Girls”, which resonates with the 30th anniversary review of the implementation of the Beijing Declaration and platform for action.
“At this point, I must commend the efforts of Ford Foundation for graciously supporting this meeting under the project “Strengthening Government Approach in Preventing and Responding SGBV.”
She reiterated NAPTIP’s commitment to work with states, the mandate Secretary of the Women Affairs Secretariat of the FCT and Civil Society Organisations to implement laws that abhor
Violence against women and girls.
Mrs Tolulola Odugbesan, the acting Director, VAP Department, NAPTIP, said that the coordination meeting was an opportunity for stakeholders to connect, proffer guidance, reflect on concerns, review successes and identify gaps.
She added that the meeting was also to discuss challenges, assess the level and effectiveness of intervention efforts and proffer recommendations and far-reaching strategies associated with the implementation of the VAPP Act 2015.
The Plateau Government says it has concluded arrangements to organise free medical care for 200,000 residents.
The Commissioner for Health, Dr Cletus Shukuk, made the disclosure on Monday in Jos at the official launch of “Project 10 Million; Know Your Number, Control Your Number.”
Shukuk explained that the free medical care was basically screening for hypertension and diabetes, which were non-communicable diseases.
The commissioner stated that the programme was a comprehensive intervention strategically in line with the national campaign of the Nigeria Health Commissioners Forum to combat the rising prevalence of non-communicable diseases.
According to him, the project would provide immediate counselling and referral and would also link newly diagnosed patients to treatment facilities.
Shurkuk further said that the increased public awareness would be carried out on hypertension and diabetes.
“The project would support the creation of a hypertension and diabetes register and, in turn, improve data collection, which would enhance health care policies and planning.
“The screening will be conducted in the 17 local government areas and will be done in selected primary and secondary health care facilities.
“I wish to call on the people of the state to avail themselves for the screening exercise to enable them to know their blood pressure and blood sugar level status,” he advised.
The News Agency of Nigeria (NAN) reports that Mrs Helen Mutfwang, the wife of the governor of Plateau, was made the ambassador of the “project 10 million.”
Mrs Clara Bamisile, the Chairperson, Oye Local Government Area in Ekiti State has commended Gov. Biodun Oyebanji for approving the N70,000 minimum wage for workers.
Bamisile gave the commendation in an interview with the News Agency of Nigeria (NAN) in Oye-Ekiti on Monday.
She described the governor’s decision as the right step in the right direction towards reducing financial burden for civil servants and making cost of living affordable for them.
According to her, Oyebanji has proved to all Ekiti indigenes that he is a good and compassionate leader, who cares for the wellbeing of his people.
“I want to commend our amiable governor, Mr Biodun Oyebanji, for approving the N70, 000 minimum wage for civil servants in Ekiti.
“He has proved to all Ekiti indigenes that he is worthy, passionate, caring and a good leader, who is ready to make his people happy as we approach yuletide.
“It is a testimony that our governor is ready to make cost of living affordable for our people, and he will not relent to do more if given a chance.”
She urged both Ekiti indigenes and residents to consider Oyebanji for a second term in office to continue his good works.
Bamisile enjoined the civil servants to be diligent in their various departments to justify the salary increment
NAPTIP to establish command in FCT to tackle violence, SGBV cases
Plateau to organise free medical care for 200,000 residents
Minimum wage: LG boss lauds Oyebanji for approving N70,000 for workers
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