Semantics? Analysts unpack ‘technical recession’ as crypto markets recover
Data from the US Commerce Department suggests America has entered a technical recession, but market analysts have highlighted key numbers that suggest investors are optimistic.
The US economy shrank for the second straight quarter, according to government data released on Thursday, fitting the criteria for a technical recession. The Biden administration maintains that the U.S. is not in a recession, citing low unemployment numbers and other metrics that counter the argument.
Mati Greenspan, founder and CEO of Quantum Economics, addressed the issue in his latest QE newsletter, noting a paradoxical effect between the fall in GDP and a rise in stocks and other risky assets.
He attributed the move to the US Federal Reserve’s decision to raise interest rates by 0.75%, which sent cryptocurrency markets outperforming equities, with Ethereum (ETH) rising 5% immediately after the announcement.
Related: Bitcoin bull run ‘gets interesting’ as BTC price hits 6-week high
Greenspan admitted that the current unemployment rate was “extremely low” compared to other periods of recession, but was not convinced that this was enough to prove that the US economy has not retreated:
“For a president to insist that there is no recession when the technical definition is met makes sense from a political standpoint. Better to let people debate semantics than to admit that you have caused the economy to shrink.”
Anthony Pompliano also addressed the release of the Q2 GDP number for the US economy in his daily newsletter, labeling the government’s commentary on the technical definition of a recession as “gas lighting”, given the unique circumstances of economic calculations:
“This recession is interesting because it is not accompanied by high unemployment or a significant drop in consumer spending, but there is no doubt that GDP is falling and the Federal Reserve is succeeding in its goal of destroying demand.”
Other prominent market analysts such as Cointelegraph contributor Michaël van de Poppe also highlighted the apparent discrepancy between the US government and Federal Reserve Chairman Jerome Powell’s insistence that the US economy was not in a recession.
BREAKING: While Powell stated that the US is not in a recession, GDP figures showed two consecutive quarters of negative growth, meaning the US is in a recession!
— Michaël van de Poppe (@CryptoMichNL) 28 July 2022
The latest interest rate hikes by the US Federal Reserve continue to be cited by market analysts as a key driver of a newfound rally in risk assets such as gold and cryptocurrency markets.
