Ignore the Loose Talk About Recession

The air is thick with recession talk, and stocks are cratering. But it just may be a mirage, a refraction of partisan distortions.

So where did this recession talk come from? It started with a projection from the Federal Reserve Bank of Atlanta that the economy is on pace to shrink in the first quarter. You could almost hear people on the left squeal with delight that the data were confirming their concerns about the Trump presidency. Those squeals led to equally absurd counterclaims from the right.

But this projection — which the Atlanta Fed affectionately calls GDPNow — is not a typical economic forecast, and it doesn’t actually tell us much. It’s a mechanical tool used to hoover up economic numbers as they become available, to try to squeeze out underlying signals about the country’s economic health.

It usually works quite well. But in certain circumstances, it can misfire.

That’s what appears to be happening now. The problem is that the GDPNow calculator has been fed the worrying data about a bump in imports, as people bought imported goods in anticipation of a price rise, but it hasn’t yet been fed other, more reassuring data on personal consumption and business investment, which will also get a boost from this surge in import spending. When it does, the calculator will start to give more reliable signals.

This glitch was pretty obvious to many economists, and indeed, late last week, an economist at the Atlanta Fed owned up to it, suggesting — in a somewhat indirect, central-bankerly way — that much of the bump was actually gold imports, and that most people may be better off ignoring this measure for now.

But news like this is too hot to be ignored in a polarized environment. For possibly the first time ever, the @AtlantaFed X account went viral. Many critics of President Trump jumped on its forecast; Senator Elissa Slotkin of Michigan added a recession warning in the speech she gave as a Democratic rebuttal to Mr. Trump’s address to a joint session of Congress last Tuesday. The “Trumpcession” was born. Of course, that’s not where the story ends.