No, we’re not in a recession
Jul 25, 2022
Episode 720

No, we’re not in a recession

Let us explain.

Second-quarter reports on the economy are coming in this week, as well as corporate financial results. The expectation is that gross domestic product will take a dip for the second consecutive quarter. But don’t start in with the R-word. Kai and Marketplace’s Amy Scott discuss why this isn’t a recession (seriously). We’ll also discuss some energy news from overseas, including Russia’s decision to restrict its supply of natural gas to Europe. And Kai’s got an opinion on teasers that are “too teasy.”

Here’s everything we talked about on the show today:

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Make Me Smart July 25, 2022 transcript


Note: Marketplace podcasts are meant to be heard, with emphasis, tone and audio elements a transcript can’t capture. Transcripts are generated using a combination of automated software and human transcribers, and may contain errors. Please check the corresponding audio before quoting it.


Kai Ryssdal: Alright, Jayk, let’s fire this puppy up, man. You in charged down there? What’s going on? Why do we just sit around. There we go, there we go. Are we ready? Are you ready?


Amy Scott: Oh, I’m ready.


All right, good. Hey, everybody I’m Kai Ryssdal. Welcome back to Make Me Smart, where we make today make sense. Now that we’re ready.


Amy Scott: Hi, I’m Amy Scott, sitting in for Kimberly Adams today. Thanks for joining us on this Monday, we’re going to do the usual news fix and then share a couple of make me smiles and get out of your way. So Kai, you have something to share?


Kai Ryssdal: Two things, one of which is a pet peeve, and then the other of which is a substantive. And I guess, I guess I’ll go with substantive first because honestly, it’s a big deal. We know that the Europeans have been having big natural gas problems. We know that the Russian shut down Nord Stream 1, the big pipeline, for the last ten days for “maintenance”, that’s in air quotes. And we also know that the Europeans are trying to get everybody in the European Union, which is to say 27 different countries, on board with cutting 15% of the natural gas use, because they want to wean themselves off Russian natural gas, which is a challenge. Anyway, Russia said today, Gazprom – which is the Russian sort of state-owned gas and petroleum conglomerate – said today it’s going to cut flows of natural gas to Europe to 20% of capacity. And that’s just bad, bad news, man. I mean, it’s gonna start getting cold in Europe really soon, forgetting about global warming and the heat there they’re having, but it’s really bad. It’s really going to be tough. And so, I think we got to keep an eye out for that, as we start thinking and worrying about a recession in Europe, you know? I mean, I just think that’s what it comes down to, you know. So, anyway.


Amy Scott: Scary.


Kai Ryssdal: So that’s my substantive thing. Oh, it is? Yeah. I mean, imagine if you had to use 15% less of something that’s really critical to your day-to-day functioning, whether you’re a business or a person. And you had to cut 15%, like tomorrow. And then, not only did you have to cut 15% like tomorrow, but then you only get 1/5 of what you’re supposed to get to begin with. It’s just, it’s really hard. It’s really, really hard. And yeah, sort of have to feel for the Europeans, while at the same time acknowledging that they did get themselves into this jam by buying Russian petroleum. Yeah. And it’s a hard one to get out of. Exactly, exactly. So there’s that. Number two, and a pet peeve. So, everybody’s talking about recession. Everybody’s talking about recession. About which, a couple of things. Number one, we’re not in recession. Number two, and most substantively – well let me back up for a minute. We’re gonna get second quarter gross domestic product, our first reading of it, on Thursday morning at 8:30 Washington time. And it’s going to be a negative number, that is to say the economy will have shrunk in the second quarter. And that will be adding on to the first quarter of negative economic growth, which was negative 1.6%, maybe it was negative 1.5%, I forget. So that will be two consecutive quarters of negative economic growth, okay?


Amy Scott: Yep.


Kai Ryssdal: And everybody’s gonna go, Oh my God, we’re in recession! And we’re really not going to be in recession, because, well, for a couple of reasons. Number one is you cannot be in a recession if you’re adding jobs, and we’re adding 400,000 jobs a month. And you cannot be in a recession if consumers are spending to beat the band, like we are doing, and all of those things that you’ve been hearing on Marketplace and elsewhere for a number of weeks now. But there are people who will say, Oh, look, the technical definition of a recession is two consecutive quarters of negative economic growth, and tada, we’re in recession. So number one, that’s not true. Number two, the people who get to decide whether we’re in a recession or not, is a group called the Business Cycle Dating Committee of the National Bureau of Economic Research. And they have seven or eight economists who look at a bunch of things, jobs and industrial production and wage. They look at all kinds of things, including GDP, but not solely limited to GDP, to determine whether or not we’re in a recession. And it’s always backward looking, right? You never know you’re in a recession the minute it starts, and they weigh a bunch of factors. So that’s the context for what I’m about to say. There’s been a lot of reporting in the last like 48 hours, of people saying that the media and the Biden administration are trying to change the way we define recessions in this economy. And that to be polite, is baloney. If this were a Friday, I’d swear, but I can’t swear on this podcast because Bridget yells at me.


Amy Scott: Only on Friday?


Kai Ryssdal: That’s just not true. That’s right, now only on Fridays would it appear in. So look, here’s the deal. Number one, the Biden administration is not redefining what it means to be in a recession. And number two, neither is the media. And if you are one of those who says, Oh my God, this is a brand new thing that the National Bureau of Economic Research gets to decide, and the media has just happened upon it, because they’re trying to prop up the Biden administration, I direct you to a tweet from Neil Irwin, formerly the New York Times now at Axios. And Neil pulled out a piece today from January 8, 1982, the first sentence of which is: the National Bureau of Economic Research, the arbiter of the nation’s business cycles, declared yesterday that the current recession began last July. So that’s in 1982. So we’ve been doing this for at least 40 years. So anybody who’s on the bandwagon of the media is trying to prop up the Biden administration on this recession thing, you can go pound sand. That’s it. That’s all I got. It’s really a Monday rant, actually. Sorry. Yes. Go ahead.


Amy Scott: If one had just, you know, maybe missed a couple of Marketplace episodes recently while reporting, where did this idea that a recession is technically defined as two consecutive quarters of negative GDP growth? Where did that come from? Why are people so?


Kai Ryssdal: That’s a great question. We’ve actually had some producers making the calls, and we can’t actually track it down. And it has become sort of just a rule of thumb and old wives’ tale, take your pick on folklore, whatever. But that’s sort of become the measurement, right? If you have sustained negative economic growth, which by the way, is just a stupid expression, negative economic growth. How about…


Amy Scott: Can’t we just say shrinkage, right?


Kai Ryssdal: So right, so two sustained quarters, which is six months, right? It’s a long time. But that’s not the actual definition. It’s too simple. It’s too timeframe bound. And it’s not really as comprehensive as it needs to be. But I don’t know exactly where it came from. I don’t.


Amy Scott: Well, dear listener, when we find out, we will make you smart about it, because I’m curious. I know this is your pet peeve, though, because I follow you on Twitter, as everyone should, I’m glad you’re talking about it.


Kai Ryssdal: Yes, thank you.


Amy Scott: So mine is sort of energy related as well, to go back to your first fix. So last week, when the UK was experiencing that record heat wave, I learned today reading a piece in Bloomberg that parts of London came very close to a blackout, which is terrifying during the hottest temperatures on record. So I read this piece by Javier Blas. He’s an energy columnist at Bloomberg. And he said that on July 20, which was the day after Britain’s hottest day ever, the combination of a surge in demand for electricity, and a bottleneck in the grid left the eastern part of London short on power for a brief spell. And that a blackout was only averted because the power authorities paid a record high price for Belgium to send electricity across the English Channel. And that price was almost 10,000 pounds per megawatt hour, which is more than 11,000 US dollars. And just for context, because that is sort of a meaningless number, that’s more than 5,000% higher than the normal price. And it was just for a short time, prices came back down. But for a while they were paying, you know, much higher than normal prices. And basically, the takeaway is that, years of underinvestment in the power grids all over the industrialized world has left us very vulnerable to these kinds of disruptions. And when demand for energy is way up during extreme heat, a failure could be really catastrophic. And this is interesting, the shift to electric vehicles, which really needs to happen to reduce carbon emissions and what’s causing these extreme heat waves, is going to put even more pressure on the grid. So I didn’t realize how close they were to that and glad they averted it, but it’s pretty scary given our own aging power grid here in the US.


Kai Ryssdal: Well, those rolling blackout things are weird, man. I remember in 2001 when I – actually I was down in LA to interview for the Marketplace show. And I was at a mall in Santa Monica, killing some time before I went in on the overnight shift. And this was in the days of rolling blackouts in the California power grid, because we were going through some turnover problems. And it’s weird cuz you’re standing in a store and the lights go off. It’s just, it’s like bizarre, and you walk outside and all the lights are off and you’re like, Oh my God. Yeah. Very bizarre.


Amy Scott: Yeah, I’ve lived through a couple of blackouts during extreme heat, and it’s like, the real deal. I mean, yeah, it’s hot and scary. So that’s mine.


Kai Ryssdal: That’s our future. A future hot and scary. But let’s get the plugin here, shall we, for a certain podcast that a certain co-host of this program is doing, right?


Amy Scott: Oh heck yeah. Let’s do it.


Kai Ryssdal: Get the plugin. Come on.


Amy Scott: Alright, so I’ve been reporting on the future of climate change and actually housing, we’re looking at sea level rise and what that means for South Florida, and Miami in particular. We’re launching in October. Check us out.


Kai Ryssdal: It’s probably like embargoed or something. I’m breaking some huge hush-hush top secret Marketplace embargo.


Amy Scott: Yeah, I’ll have to make sure…


Kai Ryssdal: Nope, nobody knows. Nobody knows. All right. Hit that button. Save me from myself. That’s right. That’s right. All right. I went first with the news. You go first with the smiles. Go.


Amy Scott: Okay. This one really does make me smile. I don’t know if you’re a Joni Mitchell fan, Kai. I won’t put you on the spot. But I am.


Kai Ryssdal: But this one was cool. I’m not, but this one was cool.


Amy Scott: Yeah, so Joni Mitchell – for those who don’t know, Canadian American singer songwriter, just an amazing musician with a totally unique voice. Total hero of mine. She made a surprise appearance last night at the Newport Folk Festival. She hadn’t had a public concert, like a full length show in almost 20 years. She’s been pretty sick. She had a brain aneurysm rupture in 2015 and hasn’t really been performing. But apparently her friends, the singer Brandi Carlile, sort of orchestrated this appearance. I saw a picture of the setlist on NPR ‘s website. If y’all are fans, you’ll recognize the song she played. Carey, Help Me, Case of You, Big Yellow Taxi. She sat in this big ornate chair that looked like a throne, which seems kind of appropriate. And you know, it was just cool. I think I would have just about died if I had been there.


Kai Ryssdal: Can you imagine? Right?


Amy Scott: No. So cool. I would have been like one of those teenagers screaming at a Beatles concert. So it’s probably a good thing I wasn’t there.


Kai Ryssdal: Alright, so mine is over the weekend. The trailer – actually, technically I think it’s a teaser, right? It’s not actually the trailer. There’s a movie.


Amy Scott: I don’t even know the difference.


Kai Ryssdal: Me neither. But somebody out there can tell us. The teaser for the next Black Panther movie dropped. It’s been the subject of much speculation, right, what they’re going to do with the role of T’Challa because Chadwick Boseman, of course, passed away a couple of years ago. He had the title role in the first one. And it was awesome. And now the teaser is out. I will tell you, it was cool to see the teaser. I’m not wild about how they did it, because it was a little too teasy. It was a little too teasy. I know that they’re trying to build it up. But I need a little more meat on those bones. It’s all I’m saying. It’s all I’m saying. But we’ll put it on the show page.


Amy Scott: But when you see a trailer and you feel like you’ve seen the whole movie and why you even bother. So I guess I’m cool with less as opposed to too much.


Kai Ryssdal: That’s fair. That’s fair. It’s Black Panther 2: Wakanda forever. Coming out in like November, I think. So stay tuned for that one. We’ll put the trailer on the homepage. The teaser, I guess.


Amy Scott: Yeah, I’ll have to check it out.


Kai Ryssdal: There we go. And on a Monday, I believe that’s a reasonably expeditious 13 minutes on this podcast. Sam Fields is in the co-host chair tomorrow. Amy is off reporting for her podcast How We Survive. We are going to do – Sam and I are going to do some other potential ways to get inflation under control without the Federal Reserve. I’m interested to see how that one goes. I know, right? And also – oh, by the by – I know right, next week, just so we’re all on the same page. Next week this podcast is going to be on summer break. Because we all need a vacation. No new episodes, is what that means.


Amy Scott: Yeah, everybody needs a vacation. In the meantime, send us your questions and comments. You can send us an email to Or you can call, leave a voice message. It’s 508-U-B-SMART. Oh! This is me. Make Me Smart is produced by Marissa Cabrera. Today’s program was engineered by Jayk Cherry.


Kai Ryssdal: Bridget Bodnar is in charge. Donna Tam is actually in charge.

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