Is the world’s largest economy staring at an imminent recession in 2022? The Q2 US gross domestic product (GDP) fell an annualized 0.9% after a 1.6% drop in the first three months of the year. Still, there is no official take on the recession in the US. Officially, it is still not a recession in the US until economists at the National Bureau of Economic Research deem it so.
Also, going by the latest jobs data, the recession may not look likely but the real picture will emerge once the next set of GDP numbers comes in. Non-farm payroll data in the US showed that 528000 jobs were added in July 2022 compared with 398000 in Jun’22.
US economy is not slowing down as yet and Fed might continue to hike rates aggressively.
But, still, the amount of interest around ‘recession’ seems to be growing. With the US economy contracting for the second consecutive quarter in Q2 2022, the Federal Reserve hiked the interest rate by 0.25% again in July to fight the high inflation and keep the economy afloat. Against this backdrop, there was a dramatic spike in social media discussions (Twitter and Reddit) around ‘Recession’ in the last week of July, reveals the Social Media Analytics Platform of GlobalData, a leading data, and analytics company.
The number of mentions of ‘Recession’ in company filings has shot up to just shy of 200 in Q2 2022, according to research by GlobalData—representing a 9x hike from Q1 2022. The leading data and analytics company notes that this spike has occurred alongside a 26% rise in mentions of ‘Inflation’, conversations about which have continued to increase since the start of the COVID-19 pandemic.
Ekta Chourasia, Business Fundamentals Analyst at GlobalData, says, “Besides the huge uptick in Q1 2022, this is the most that ‘Recession’ has been discussed in the last six years. Concerns about inflation have been rising since Q2 2020, but the increased pressures surrounding the Russia-Ukraine conflict have had a great economic impact.
The average sentiment of ‘Inflation’ declined 1% over Q1 2022. The discussions are not only just on inflationary issues but also on how companies are dealing with them. For example, firms are discussing offsetting wage inflation via hiring freezes.”
The supply crunch could have led to prices rising and now inflation is at several decades high. In order to tame inflation, Fed has been increasing rates since January 2022. What remains to be seen is whether the rate hikes will be able to control inflation without leading the economy into a recessionary environment. The CPI numbers, its break-up and the pace of rate hikes by the Fed in the months ahead will be keenly watched.
Below are a few of the most popular influencer opinions captured by GlobalData’s Social Media Analytics Platform:
David Brady, CEO of Global Pro Traders, Inc:
“No one in their right mind in the financial community is going to buy a change in the definition of a recession from the White House. It’s an obvious attempt to obscure the fact that the US is now officially in recession and they can’t fudge the numbers coz it’s so bad!”
Jos Pagliery, Investigative Reporter at The Daily Beast:
“The economy is receding. This is a recession. Fuzzy redefinitions are political distractions.”
Marvin Germo, CEO of Stock Smarts
“The latest GDP figures confirm what everyone has been saying all along. The US is in a recession. Here are the numbers: Q1: -1.6% Q2: -0.9% 2 quarters of negative growth. Raising rates would continue to strain the economy all for the need to deal with inflation.”
Peter Schiff, Chief Economist and Strategist at Europac
“The Chicago Fed National Activity Index “unexpectedly” sank to -.19 in June, its lowest level since Feb. The estimate was for .05. The prior month was also revised down from .01 to -.19. My guess is that June will be revised lower next month. Recession deniers need to wake up!”
Afshine Emrani, Cardiologist at LA Galaxy
“We’re in that stage of the cycle when the US Government tries to change the definition of a recession to prevent a recession.”