A recession is defined as a “significant decline in economic activity that is spread across the economy and lasts more than a few months.” The uncertainty of the term, as well as improving supply-chain conditions in sectors like the auto industry, suggest a slump isn’t inevitable.

Why should we care?
Recessions can become a self-fulfilling prophecy if key decision makers assume a contraction is on the horizon. Goldman Sachs, economist Nouriel Roubini, former New York Federal Reserve head Bill Dudley, and others argue that a recession is looming, but other powerful voices disagree—and it’s not just the White House and the Treasury Department who contend that continued full employment is possible. Ian Shepherdson, Chief Economy at Pantheon Macroeconomist, for example, thinks households’ large cash balances will help them overcome inflationary pressures and buoy the economy through the uncertainty. “Economic growth likely will be modest in the third quarter, but our base case remains that a recession is unlikely,” he wrote. “If it happens, it will be brief and mild.” Whether it'll become officially defined as a recession or not, this upcoming macroeconomic period might shake up the financial space by rewarding smart economic players over less rational ones. In the crypto industry, for example, where Coinbase is now laying off 18% of its workforce, rival exchange Binance is on a hiring spree. Implying Coinbase’s springtime ad spend partially explains the company’s demise, Binance.US CEO Brian Shroder said, “There is a reason there is no Binance Stadium. There’s a reason why Coinbase spent more on a 30-second Super Bowl ad than we did in our entire marketing budget of 2021.” Whether these new dynamics create a “significant decline” or just a more efficient allocation of resources is yet to be determined.