But not all recessions are like that. Sometimes the economy can grow all the way through a recession. In fact, some economists believe the world is in a recession now and most people don’t even realize it.
“By our metrics, we’re in a global growth recession,” said Alessio de Longis, senior portfolio manager at Invesco. “As we enter 2020, growth is slowing and it’s slowing in a synchronized way.”
A growth recession is when the economy grows below trend and decelerates. Trend growth is the average growth rate that sustains unemployment and inflation at a stable level.
The world economy has grown at a trend rate of roughly 3%, de Longis said. In 2018, global GDP grew at a pace of 3.04%, according to the World Bank. The International Monetary Fund predicted earlier this month that the world’s economy will grow by 3% this year. But that’s just a forecast: The economy could currently be in worse shape, putting the world in a growth recession.
Strong consumer spending has helped the US economy stay on course, but growth is slowing in the United States too. And over the summer, worries about trade conflicts started to hurt consumer sentiment, which could eventually hurt consumer spending.
For the United States, a global growth recession will probably mean sluggish growth, rather than millions of lost jobs like the last recession 10 years ago did. A growth recession would be nothing like 2008, when America entered a so-called technical recession: at least two consecutive quarters of a shrinking economy. The US economy is far away from that.
Third quarter GDP growth is expected to come in at 1.8%, according to the Federal Reserve Bank of Atlanta. The New York Fed is even forecasting 2% GDP growth between August and October, and 1.3% in the fourth quarter.
Source : CNN