Even though market analysts have highlighted important indices that imply investors are hopeful, data from the United States Department of Commerce suggests that the United States has entered a technical recession.
According to statistics that the government issued on July 28, the United States economy experienced a contraction for the second consecutive quarter, meeting the requirements for a technical recession. The United States is not now experiencing a recession, according to the administration of Vice President Joe Biden, who cites low unemployment numbers and other indicators as evidence to support this claim.
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Mati Greenspan, founder and CEO of Quantum Economics discussed the topic in his most recent QE newsletter. He pointed out a paradoxical connection between the decline in GDP and the boom in stocks and other risk assets.
He ascribed this shift to the decision of the US Federal Reserve to hike interest rates by 0.75%, which caused cryptocurrency markets to outperform stock markets, with Ethereum (ETH) soaring by 5% immediately following the announcement of the rate increase.
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Greenspan admitted that the present unemployment rate was “very low” in comparison to prior times when the economy was in a recession; yet, he was not satisfied that this was sufficient evidence to demonstrate that the economy of the United States has not entered a recession:
“From a political perspective, it does make sense for a President to insist that there is no recession when the technical definition of a recession is met. It is preferable to enable people to fight semantics rather than to confess that your actions have caused the economy to contract.
In his daily newsletter, Anthony Pompliano discussed the release of the GDP statistic for the second quarter of the US economy. He referred to the government’s statement on the formal definition of a recession as “gas-lighting,” given the specific circumstances of economic metrics:
“This recession is interesting since it is not accompanied by substantial unemployment or a significant decline in consumer spending,” the author writes. “However, there is no doubting that GDP is declining, and the Federal Reserve is successfully achieving its goal of eliminating demand.”
Other prominent market analysts like Michael van de Poppe have also brought attention to the apparent contradiction between the assertions of the United States government and the Federal Reserve chair Jerome Powell that the United States economy is not currently in a recession.
🔥BREAKING: While Powell stated that the U.S. is not in a recession, numbers from GDP gave two consecutive quarters of negative growth, meaning that the United States is in a recession! 🇺🇸
— Michaël van de Poppe (@CryptoMichNL) July 28, 2022
“BREAKING: While Powell stated that the U.S. is not in a recession, numbers from GDP gave two consecutive quarters of negative growth, meaning that the United States is in a recession!”
Market observers continue to mention the most recent increases in interest rates implemented by the Federal Reserve in the United States as a primary factor behind the recent upswing in risk asset markets such as the gold and cryptocurrency markets.
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