U.S. economic growth is deteriorating. However, as this week’s two ISM reports for July and (likely) today’s employment report show, growth is not collapsing. High inflation is already squeezing consumer discretionary spending, consumer sentiment has fallen to the lowest on record, GDP has been negative for the last two quarters, and tighter financial conditions are hurting affordability in the housing market and increasing volatility in financial markets; hence, the chances of avoiding a recession (if we're not already in one) at this point look slim.

While recessions are a natural part of the business cycle in a capitalist system, the preference is to avoid them, given they are accompanied by significant job losses and business closures, not to mention any number of other nasty surprises. Furthermore, not all recessions are built the same; they come in any number of different shapes and sizes, and with varying depths and duration, as well as catalysts.

With that in mind, in today’s Economics Weekly, we examine the current economic situation relative to previous downturns, with the view that there is a reasonable case to be made that the current slowdown could turn out to be a more moderate recession than the historical average.

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Richard de Chazal, CFA, is a London-based macroeconomist covering the U.S. economy and financial markets.