“we never left the recession of March 2020 and … everything has been getting gradually worse”

I subtitle this post “The Shadow of ShadowStats” which is now offline and available only by subscription. Referring to under-estimated inflation, Peter St. Onge (Heritage) and Jeffrey Tucker (Brownstone Institute) argued in June that not only are we now in a recession, we’ve been in recession for the past four years!

They note that John Williams’ ShadowStats (the usefulness of which has been evaluated in the past, here) indicates much higher inflation than officially reported. They also point out that deflated retail sales and new manufacturing orders has been down since the beginning of 2021 (conveniently omitting the NBER defined recession period of 2020M02-04 and post-recession period 2020M04-M12).

They also stress the fact that in defining output, government consumption should be excluded, or alternatively, private consumption should be the object of focus. In Figure 1, I show the relevant series.

Figure 1: GDP (black, left scale), GDP ex-government consumption (blue, left scale), consumption (teal, right scale), all in bn.Ch.2017$ SAAR. Source: BEA 2024Q2 2nd release via FRED, author’s calculations.

GDP ex-government consumption looks much like GDP (and pretty close to GDO and GDP+, shown in this post). There are negative growth rates in consumption, but there are no two-consecutive quarter events, which seems to be the St.Onge-Tucker criterion.

Note that Dr. Antoni has elsewhere indicated there was a recession in 2022H1.