Insights & Advice


Recession or Not? Analysis by Allen Harris, October 2022

Is the U.S. economy currently in a recession? The National Bureau of Economic Research isn’t officially calling this a recession, but after two consecutive quarters of declining GDP, Berkshire Money Management Founder and CEO Allen Harris is convinced that what we’ve been experiencing in 2022 is, in fact, a recession. And as the Federal Reserve’s continued efforts to combat inflation begin to create “deep, deep pain,” the recession will only grow in 2023.




Well there’s opinions, there’s facts, there’s data, and there’s anecdotes.

So a fact, and I’m not going to get all wonky on this, promise, but people are familiar with the letters GDP, which stands for gross domestic product. It’s a measure of the overall output of the U.S.

It’s the size of the economy, essentially. And there’s a defining organization, a board, if you will, that says, “this is when a recession has occurred.” It’s called National Bureau of Economic Research. And the fact is that they have not yet said it’s a recession. And the fact is that, based on their definition of what a recession would be, it doesn’t look like what we’re in right now is a recession.

The opinion by me, and not by many other people I’ve talked to, is that we’re in a recession, have been in a recession for much of 2022. I don’t know how the next few months will move, but I think anywhere from about February until last month, well month prior actually, the last month has been actually kind of gangbusters in some ways.

[00:01:00] So I think that, even if the rest  of the world doesn’t want to agree with my opinion, because my opinion’s just opinion – it doesn’t fit with the actual definition.

But the fact is that in the economic world, we do rely on the N.B.E.R. to date when a recession actually does happen. But the other fact is that we, many of us, have had the opinion that two quarters of contracting GDP back to back – we had one -1.6 in the first quarter of 2022, and -0.6 in the second quarter – [makes a recession]. You know, we had that rule of thumb, simply a heuristic. But it became such a widely-held opinion that to many of us, that opinion became fact.

But the fact is that we don’t use that for an actual [marker]. We’re not going to open a textbook someday and say with the asterisk … yeah, it’s not going to have the asterisks cause it won’t fit the definition.

I though go with my opinion and say it’s bad enough for recession. I don’t care about your definition. I feel like it’s a recession. But there’s a whole lot of other opinions in terms of, and by the way, this quarter  went from -1.6 to 0.6. We don’t know this quarter yet. We won’t know, but very soon, Right?

[00:02:00] The Atlanta Fed does a good job tracking real-time debt as much as you can, which is, I don’t wanna say worthless, but hard, because they revised that number like months and months out. But it’s like two plus, 2.7. It’s actually positive. But, you know, the opinions come, I think in the future, like what’s going to happen.

There’s a lot of components to my opinion, and here you have a lot of different opinions in terms of like what 2023 and forward is going to look like. But whether or not we’re in a recession right now, I think you can say that the economy’s fragile enough that the next big shock would push the U.S. economy into a recession.

And I think that next big shock is that a once-heralded Fed for its transparency over the course of the last three, four, five weeks in particular, but the last two weeks really, have pivoted from, ” it can be a soft landing” to like, “there’s probably there’s going to be pain”. What was it from the Fed? Uh, Bostic

[00:03:00] Fed president Bostic. He said deep, deep, deep, deep pain. He said, ” I think we can avoid deep, deep pain”. And so when you hear a Fed governor say, I think we can avoid deep, deep pain, that shifted my mind a real lot in the last couple weeks. It actually changed a lot of our investment portfolios.

So I think that the economy’s fragile enough that the Fed is going to push us into something in 2023 where, no longer will they say it’s an Allen Harris opinion recession, it’s by the metrics that we all follow in the industry use as a definition, [a recession]. It is.


Allen Harris is the owner of Berkshire Money Management in Dalton, MA, managing more than $700 million of investments. Unless specifically identified as original research or data gathering, some or all of the data cited is attributable to third-party sources. Unless stated otherwise, any mention of specific securities or investments is for illustrative purposes only. Adviser’s clients may or may not hold the securities discussed in their portfolios. Adviser makes no representations that any of the securities discussed have been or will be profitable. Full disclosures. Direct inquiries to Allen at email hidden; JavaScript is required.