GDP collapse puts U.S. economy into recession red zone
U.S. economic growth is dangerously slow. I’ve frequently written about research from the Fed that finds since 1947 when two-quarter annualized real GDP growth falls below 2%, recession follows within a year 48% of the time. (And when year-over-year real GDP growth falls below 2%, recession follows within a year 70% of the time.
Citigroup has also taken a shot at determining the stall speed: “Specifically, when U.S. growth has cut below 1½ percent on a rolling four-quarter basis, it has tended to fall by nearly 3 percentage points over the following four quarters, and the economy has typically entered recession.
Bottom line: Growth the past two quarters has averaged about 1.6%. Not only does this mean the economy is growing more slowly than last year’s 1.8%, it is also slow enough to signal about a 50% chance of a recession within a year. And the third quarter also looks weak.