August 1, 2022

Wood: Rrrrr, matey, recession talk abounds

International Talk Like a Pirate Day won’t come until Sept. 19, but we seem to be hearing a lot of Rrrrs lately, as in that most dreaded of R words, recession.

So Rrrrr we, or aren’t we — in a recession, that is?

Second-quarter gross domestic product numbers released July 28 would seem to validate the traditional measure of a recession, that is, two consecutive quarters of negative GDP.

U.S. GDP declined by 0.9% in the second quarter, according to data released by the U.S. Commerce Department’s Bureau of Economic Analysis. That followed an even worse first quarter, which saw a decline of 1.6%.

But are we in a recession? We might not know for a few months. That’s because data are often revised months later, as new evidence emerges. So, while a lot of people — think journalists and the general public — will take the numbers at their initial face value and answer, “aye,” the truth is that we might not know for a while.

Revision of numbers is a routine occurrence in the world of government statistics, as new data emerge to revise prior estimates. Every month, unemployment rates and labor-force statistics are revised going back months or even years.

Population estimates, as well, are changed for prior years. Initial announcements for the number of jobs added nationally in a given month almost never equal later, better estimates.

So it shouldn’t come as a surprise if the GDP numbers are revised.

Even Federal Reserve chairman Jerome Powell notes that the numbers released July 28 should not be taken at face value.

“You tend to take first GDP reports, I think, with a grain of salt,” Powell said, “but of course, it’s something we’re looking at.”

Another consideration — even if we are in a recession — is that Colorado tends to outperform the nation during economic downturns. And the Boulder region, as well as Northern Colorado, enjoys a diverse mix of industries that help weather turbulent seas.

If retail struggles, aerospace might thrive. If agriculture falters, energy might carry the day. Trouble in the service sector? Look to life sciences or the booming distribution industry. If health care feels a bit queasy, real estate might offer firmer ground.

Nationally, the Fed has been taking strong action to ward off inflation, which has dealt major blows to consumers and businesses alike. In response, the Fed has been aggressively raising interest rates to cool the economy.

But the Fed has been forced to walk a tightrope: Cool the economy without tipping the nation into the briny deep. (Could that be the salt to which Powell referred?).

Avast, and take heart.

While that “Rrrrr, matey” might portend a storm on the horizon, it’s also possible that it hails from a ghost ship passing in the night, causing unease but disappearing without taking solid form.

Christopher Wood can be reached at 303-630-1942 or

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