What Happens to SLOOS: Credit Card Tightening When Real GDP Turns Negative?
What happens when real GDP contracts? Recession definition, Fed response, and historical market behavior during negative growth quarters.
How SLOOS: Credit Card Tightening Responds
Scenario Background
Real GDP measures total US economic output adjusted for inflation. A negative quarterly print (annualized) signals the economy shrank during that period. While the NBER uses a broader set of indicators to officially date recessions, two consecutive quarters of negative real GDP has historically been the shorthand definition.
Read full scenario analysis →Historical Context
The US has had 12 recessions since 1948, each including at least one negative quarter. The 2020 COVID downturn produced -5.1% (Q1) and -31.2% (Q2) annualized contractions, the steepest in post-war history. The 2008-2009 Great Recession included four consecutive negative quarters with a cumulative 4.3% decline. The 2001 recession was mild by historical standards with only three negative quarters totaling less than 1% decline. The 1981-82 recession included six negative quarters.
What to Watch For
- •Atlanta Fed GDP Now turning negative
- •Chicago Fed National Activity Index below -0.7
- •GDI (Gross Domestic Income) confirming GDP weakness
- •Two consecutive negative quarters (technical recession)
- •NBER dating committee signaling recession onset
Other Assets When Real GDP Turns Negative
Other Scenarios Affecting SLOOS: Credit Card Tightening
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