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Recovery—or Recession? Economists Debate

Continuing recovery or a new downturn? Economists debate
Applicants wait to enter a job fair in New York City
Applicants wait to enter a job fair in New York CityPhotograph by John Moore/Getty Images

The thing about a recession is that you typically don’t know you’re in one until it’s been around for a while. Broadly defined, an economy is in recession not just when it’s operating below capacity, but when it’s outright shrinking. Exactly what constitutes that shrinkage, though, can be fuzzy. The most cited rule of thumb, two consecutive quarters of declining output, doesn’t always apply. Gross domestic product is often positive when a recession starts. That’s why recoveries sometimes don’t feel much different than recessions.

“This is the most bizarre business cycle I’ve ever seen,” says David Rosenberg, chief economist at Gluskin Sheff & Associates, who thinks the U.S. is “uncomfortably close” to a recession. The question Rosenberg and some other economists are now asking is not if the U.S. will dip back into recession, but when. Or whether it already has.