A Different Take on the U.S. Economy: Maybe It Isn’t Really Shrinking

When the Commerce Department reported last month that U.S. economic output contracted for two consecutive quarters during the first half of the year, it raised fears the U.S. might be in recession, defined in a popular rule of thumb as two negative quarters of growth. New data sends a different message: rather than in recession, the economy might be in something closer to a stall.

Economic output can be measured two different ways: gross domestic product, or gross domestic income. For every dollar an individual spends to buy some good or service—a restaurant meal, a car, a doctor’s visit—another individual earns a dollar of income to make and deliver that good or service. GDP captures the spending side of these transactions, GDI the income side.