[00:02] invented a better one. It's called a Main Street Recession. And as of last indicator that started going off in just a minute. But first, let me just explain why the traditional definition makes no sense. First and foremost, fun fact,
[00:17] of recession. The National Bureau of Economic Research, who is responsible for declaring official recessions, has this convoluted explanation of what a recession is. It basically says it's entirely subjective and they just decide
[00:31] when recessions start and end. And second, because of this subjectivity, a lot of people use the benchmark of two negative quarters of real GDP growth as fine. GDP is a fine measurement. But my problem with it is that it doesn't
[00:46] really represent what is going on with the average American. Right now, GDP is growing basically because all of these tech companies are investing billions and billions of dollars into building data centers. Meanwhile, almost every
[00:59] other economic indicator shows that ordinary Americans are struggling. So, shouldn't a recession measure whether or not the economic lives of ordinary people are getting better or worse, rather than measuring economic output at
[01:12] the highest possible macro level? So, about six months ago, I spent a ton of time coming up with a new measurement of a recession. I thought about like 50 make it really simple. And I came up with two basic rules of whether in a
[01:25] recession or not. Number one, is real wage growth positive or negative? Real wage growth is a measurement of inflation-adjusted income. If real wage increasing. That's good. When real wage growth is down, people's spending power
[01:39] is declining, which is bad. To me, this one simple measurement explains so much about what is happening in the economy for ordinary people. Rule number two is basically the Somrull, which measures if unemployment is going up quickly above
[01:53] definition back in November. And back then, we were not in a recession by these measurements. But just last week, that changed as real wage growth turned negative. Inflation has shot up over the last couple of months, wages haven't
[02:06] kept pace, and so the average American is now experiencing declining spending power. Right now, by my definition, we're sort of in a yellow alert kind of conditions have been met. Fortunately, the unemployment rate hasn't gone up,
[02:21] wage growth. So, I don't think we're in a full-blown Main Street recession, but the warning signs are there. Personally, unfortunately, I don't think this is inflation's probably going to keep going up. I don't think wages are going to
[02:34] keep pace, and I think we're going to be in a mild Main Street recession for the foreseeable future. This is a problem. This sucks, right? I don't care if GDP is going up if the average economic life of an American person is getting worse.
[02:48] indicator make sense to you? Do you prefer GDP? Is there a better way to measure a recession? Let me know in the comments.