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Who declares a recession

Although a recession is commonly described as two consecutive quarters with negative gdp growth, an official recession is defined by a group of 8 economist in the Business Cycle Dating Committee, which is part of the National Bureau of Econmoc Research, a private non profit organization. The committee usually considers an economic period a recession after the fact, and, as the committee name explicitly says, their main task is to define the dates between the beginning and the end of a recession. Why is this important? Because even if we get a negative gdp print in the 2Q22, and the market expects a recession to be upon us (as per the chart below), the #fed may claim a soft landing if a recession has not been officially declared by the BCDC, and may have an excuse to hike rates even more to fight inflation. This may be an important detail to follow.


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Source: Deutsche Bank.


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