Obama’s Top Economic Adviser Responds To New BEA Report: U.S. Economy Has ‘Been In Recession For Some Time’

On Thursday, Jason Furman, who served as former President Barack Obama’s Chairman of Economic Advisers, responded to the news that the U.S. economy contracted in the first quarter of 2023, saying that the data suggests that the economy has been in a recession “for some time.”

According to a new report from the Bureau of Economic Analysis (BEA), the U.S. economy contracted at an annual rate of 0.5% in the first quarter of 2023, which is the fourth quarter out of the last five with negative growth. 

Furman responded to the report in a thread on Twitter. 

“New data out indicates that the economy contracted at a -0.5% annual rate in Q1, the fourth quarter of the last five with negative growth,” Furman wrote. “This is based on average of GDP (+1.3% in Q1) and GDI (-2.3%) which is generally more reliable than either one individually.”

“Can’t know where the negative growth comes from because the expenditure numbers (consumption, investment, etc.) sum to the 1.3% growth. So if that’s wrong then one of the components is wrong. Is why I wish the BEA was more Bayesian in formulating a single number w/ best info… On the income side, corporate profits fell for the third straight quarter and are down 2.8% over the last year. BUT, this reflects a huge loss for the Fed. Taking that out profits down a little in Q1 and up 7.0% in the last quarter,” Furman continued. 

“I have to say, I find all of this a little confusing and want to think more about it and read what others have to say. The numbers are telling wildly varying stories about the truth in the economy. And then that truth itself has some strange aspects to it (like the Fed losses),” Furman added. 

“If I truly believed the average of GDP + GDI (and I mostly do believe it) then one could reasonably describe the economy as having been in recession for some time, but a very very strange recession with strong employment gains and low unemployment–so a productivity decline,” he concluded.

New data out indicates that the economy contracted at a -0.5% annual rate in Q1, the fourth quarter of the last five with negative growth.

This is based on average of GDP (+1.3% in Q1) and GDI (-2.3%) which is generally more reliable than either one individually.

— Jason Furman (@jasonfurman) May 25, 2023