Charles Schwab Chief Global Investment Strategist Jeffrey Kleintop discussed the state of the U.S. economy and why it’s in a ‘mild recession.’ Kleintop joined Yahoo Finance Live on January 24, 2023.

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The United States economy has been the subject of much discussion and debate in recent times, particularly as talk of a possible recession lingers in the air. While there are certainly factors that suggest the American economy is undergoing some challenges, whether or not it can be strictly defined as a “mild” recession might be up for debate.

First, let’s consider what a recession actually is. Simply put, a recession is characterized by a significant decline in economic activity over an extended period of time. Specifically, it is defined as two consecutive quarters of negative economic growth. This can mean a decrease in GDP, job losses, or decreased consumer spending, among other factors.

Looking at the U.S. economy, there are certainly signs of slowing growth. According to data from the Bureau of Economic Analysis, GDP growth slowed from 3.1% in the first quarter of 2019 to 2% in the second quarter. Additionally, job growth has slowed in recent months, with just 130,000 jobs added in August 2019, compared to earlier in the year when job gains were closer to the 200,000 mark.

At the same time, there are a few factors that suggest the current state of the U.S. economy might only be a mild recession at worst. For one, the unemployment rate remains near historic lows, with just a 3.5% rate in September 2019. Additionally, consumer confidence and spending are both still strong, with retail sales actually increasing by 0.4% in August despite concerns about the possibility of a recession.

Perhaps most significantly, the Federal Reserve has actually taken steps to try and stave off further economic slowdown, including two interest rate cuts in the summer of 2019. These cuts were made in response to concerns about global economic conditions and the potential for trade disputes to negatively impact American businesses.

So, is the U.S. economy in a mild recession? It’s difficult to say for sure. While there are certainly challenges that the American economy is facing, there are also a few positive indicators that suggest things might not be as dire as some are making them out to be. At the end of the day, only time will tell whether the U.S. will experience a full-blown recession or whether current conditions will improve.