A Pamphlet from Don Stuart, Preserve Our Nation, LLC
Pamphlet #45 - 07/29/2023

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Recession this Year - 2023?

In the news, including FOX, the timing of recession is confusion.

The news says there is not an expected recession this (Calendar) year but reports government saying not this (Fiscal) Year. So are we going to have a recession during October-December 2023 (The Next Fiscal Year and this calendar year)?

My answer is very likely.

Note the following Revisions from the BEA are updated as of 10/27/2023.

The news outlets are saying that the 2nd quarter GDP growth is 2.4% (9/1 Revised down to 2.1%, 9/28 revised up to 2.2%) for April – June 2023 versus 1st quarter GDP growth of 2.0% (9/28 revised up to 2.2) for January – March 2023. And since Consumer spending is 70% of GPR then news outlets are continuing to say consumers are spending aggressively during April-May 2023. This is based on GDP, not the details!

The latest GDP growth for the 3rd quarter is 4.9%. This is the advanced calculation which recently is always downgraded. Wait to see in a few weeks.

But if you look deep into the data (which news outlets can’t seem to do) you will find a different story.

1. Consumer spending Jan-Mar 2023 was 4.2%.
2. Consumer spending Apr-Jun 2023 was 1.6%. A drop of 62%.
3. Consumer spending Jul-Sep 2023 was 4.0%. An increase of 150%.
   Very unexpected growth in consumer spending on services, investments and goods..

It looks like my expected decline in consumer spending did not fall for this quarter. But if consumer spending returns to a declining trend, as expected in the 4th quarter Oct-Dec 2023 we could still see a GDP growth below 0%.

Now what kept the GDP growth so high at 2.4% (9/1 Revised to 2.1% and 9/28 revised up to 2.2% ) for Apr-Jun 2023? The GDP growth recovered by Consumer spending. It seem that the other 30% of GDP which is Business, Government (Fed some, but mostly State and Local spending) remained low at 0.84%. But Business Investment was 0.0%. Does does not look good for the future.

1. Business and Government spending Jan-Mar 2023 was -1.27% (Consumer spending brought the GDP up to 2.0%)
2. Business and Government spending Apr-Jun 2023 was 5.7%. (This brought the GDP up to 2.4% (9/1 2.1%, 9/28 2.2%) along with consumers spending at 1.6%: at least both positive)
3. Business and Government spending Jul-Sep 2023 was 0.84% (Consumer spending brought the GDP up to 4.9%)

You can see that Consumer spending and Business spending has reversed themselves during the first two quarters of the year and has reversed again during last quarter. Remember consumer spending is the forecasting for the future. So can Consumer spending continue to out perform Business and Government spending?

Quarterly Tax Receipts Percent Change Chart since tax reform.
Source: FRED Frederal Reserve St. Louis

Our only hope for not having a recession in Oct-Dec 2023 is that Consumers keep spending. Does not look like this is going to happen?

My forecast is that Oct-Dec 2023 may see a GDP growth fall close to 0% and may fall slightly below 0%. This will give a very good indication that the Jan-Mar 2024 GDP growth will be between 0.0% and -1.0%.

Recession is when two consecutive quarters fall below 0%. Is it going to be Oct-Dec 2023 and Jan-Mar 2024? Or a quarter sooner? Or a quarter later? Maybe be in 3rd quater 2024?

Recession is really about consecutive months and sometimes references quarters. The National Bureau of Economic Analysis (BEA) research defines a recession as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.”

Is that just two or three months of declining activity?

The National Bureau of Economic Analysis (BEA) research define Recession as wide spread across the country, which means that positive economic activity ( positive GDP) may still be good in some states and not have a recession. So how many States does it take in declining economics to have a recession? All of them?

Depending on state GDP for the nation may not define major recessions.

Stretching it out to two quarters (6 months) of GDP decline is over kill, but that is how I will define it as well as others in the news.

Our Government at Work!

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