'Technically speaking' it's highly unlikely US is already in a recession, BofA says

It was "highly unlikely", technically speaking, that the US economy was in a recession, Bank of America Securities said, although there were some caveats.

While gross domestic product growth in the first and second quarters of 2022 "may very well" be negative, BofA's global economist, Ethan S. Harris, put that down to "fluky movements in trade and inventories".

In a research note sent to clients and dated 6 June, Harris further pointed out that of the four indicators that feed the official coincident index, just one had turned negative.

He also believed it "highly unlikely" that June would be remembered for being a recessionary month.

Furthermore, if one averaged growth between the last quarter of 2021 and the second quarter of 2022, then GDP growth was running at roughly 2.0%, he pointed out.

"If we are in a recession, it certainly did not start in 1Q. Virtually every recession metric was strong in 1Q," Harris said.

The economist also stressed that recessions could look very different, whether in length or magnitude.

The 2020 recession lasted just two months, but saw GDP plunge by 10.1%, whereas the recession of 2001 saw GDP rise by 0.5%.

"The 2008-9 period illustrates why we can’t 100% rule out that June is a recessionary month. It could be that this is a period like 2008 that is very weak now and will turn negative later," he added.

"Moreover according to real time data, payroll growth was positive through July 2008 but has since has been revised sharply lower."