(The Epoch Times)—New research by a pair of prominent economists suggests that the U.S. economy has been in a recession for the last two years after inflation adjustments are taken into account.
According to Bureau of Labor Statistics data, cumulative inflation since 2019 has totaled nearly 25 percent.
But inflation figures have been understated by nearly half, resulting in cumulative growth to be “overstated by roughly 15%,” say economists EJ Antoni and Peter St. Onge.
“Moreover, these adjustments indicate that the American economy has actually been in recession since 2022,” they wrote in a new study published in Brownstone Journal.
Undercounting inflation has implications for economic growth because rapid price changes have bolstered the nominal values of a wide array of economic metrics “without resulting in any real change.”
Antoni and St. Onge cited several data points comparing nominal (non-inflation-adjusted) and real (inflation-adjusted) since January 2019.
New orders for durable goods have increased 7.5 percent (nominal) but fallen 13.4 percent (real). Retail sales have rocketed more than 23 percent (nominal) but rose 3.2 percent after adjusting for inflation. Nominal disposable personal income has surged about 35 percent, but the real rate has been just nearly 13 percent.
Nominal GDP at a seasonally adjusted annualized rate shows the national economy has soared 37.4 percent from the first quarter of 2019 to the second quarter of 2024.
The Bureau of Economic Analysis (BEA) uses the GDP Price Deflator—a tool that reduces the value of goods and services produced in the wider economy—to reflect inflation revisions. When it is applied, nominal growth declines to 13.7 percent in this five-year span.
But this is flawed, the economists stated.
“Utilizing a modified GDP deflator that includes more accurate metrics for housing, regulatory costs, and indirect costs yields a more accurate inflation measurement and therefore a more accurate valuation of real GDP,” the paper said.
Antoni and St. Onge concluded that the adjusted real GDP fell 2.5 percent from the first quarter of 2019 to the second quarter of 2024 and entered a recession in early 2022.
“Even without considering population growth and per capita GDP, the adjusted real GDP values imply that the nation entered a recession in the first quarter of 2022 and remained in that contraction through the second quarter of 2024,” they wrote.
‘Egregious Biases’ in Inflation Data
The paper aimed to address various “egregious biases in inflation statistics” to gauge an accurate assessment of inflation over the last five years.
“This matters not only because of the political salience of rising prices, but also because official inflation numbers are used to calculate real economic growth by adjusting nominal dollars to inflation-adjusted dollars,” the economists wrote.
Antoni and St. Onge noted that government inflation measurements have many shortcomings, from housing to health insurance.
U.S. home prices have accelerated to all-time highs since the pandemic, surpassing rents in the same span.
“The CPI has grossly underestimated housing cost inflation,” they wrote, highlighting that the consumer price index (CPI) fails to “actually account” for the direct cost of homeownership. Instead, federal statisticians rely on the “owners’ equivalent rent of residences,” which accounts for more than 26 percent of the CPI.
“If the costs to rent and own change commensurately over time, then this methodology will be relatively accurate,” the economists stated. “Unfortunately, the cost of owning a home has risen much faster than rents over the last four years and the CPI has grossly underestimated housing cost inflation.”
In 1983, the federal government changed its CPI inflation calculations by transitioning from tracking mortgages and housing costs to monitoring “owners’ equivalent rent.” The objective behind the modification was that the measurement would be less volatile, and officials viewed housing as an investment.
In the August CPI report, this category jumped 0.5 percent monthly and 5.4 percent year-over-year.
Measuring price changes when consumers are not directly charged for services is another challenge to accurately measuring inflation.
Health insurance is one example of this hurdle to correctly assessing inflation.
“Premiums are used both to pay for the actual cost of providing the service of insurance (risk mitigation) and for medical services and commodities,” the report said. “The CPI neglects both, and instead imputes the cost of health insurance from the profits of health insurers.”
Last month, the health insurance component of the CPI was little changed monthly and rose 3.3 percent from a year ago.
Quantifying the effects of government regulations can also be a roadblock to better understanding inflation because statistics agencies will determine prices are lower if products have improved.
“The difficulty of estimating such improvements can result in artificial cost reductions due to perceived benefits to the consumer that do not actually exist,” they said.
Solid Growth, Low Inflation Ahead: Forecasters
The U.S. government recently reported that the economy grew faster than initially reported in 2023.
The Bureau of Economic Analysis released its annual benchmark revision report last month. The changes confirmed that the GDP growth rate was 2.9 percent last year, up from the previous estimate of 2.5 percent. Additionally, growth in 2022 was revised higher by 0.6 percentage points to 2.5 percent.
Higher corporate profits, consumer spending, and business investment drove adjustments.
The first-half recession in 2022 was also canceled as the year’s second-quarter growth rate was revised higher to 0.3 percent from negative 0.4 percent.
Forecasters anticipate strong economic growth and low inflation for the rest of the year.
According to the Federal Reserve Bank of Atlanta’s GDPNow forecasting model’s estimate, the U.S. economy is expected to expand by 3.2 percent in the third quarter. The New York Fed Staff Nowcast shows comparable growth projections.
The Cleveland Fed’s Inflation Nowcasting suggests the annual inflation will ease to 2.3 percent in the next CPI report.
Two Storms, One Harvest
Every food crisis in living memory has been a one-shock event. The 2008 price spike was a commodity bubble. The 2020 shortages were a logistics failure. The 2022 grain scare was a war on one exporter’s ports. Each time, the system bent, adjusted, and recovered, and each time the experts assured us afterward that global markets are simply too big and too diversified to fail.
What nobody in Washington seems eager to discuss is that 2026 is shaping up to be something the modern food system has never actually faced. Two independent shocks, one climatic and one geopolitical, are converging on the same harvest cycle at the same time. Not sequentially. Simultaneously.
Start with the weather. The Pacific Ocean is currently building toward what forecasters now openly call a record event. NOAA’s Climate Prediction Center puts the odds of at least a strong El Niño near 88 percent, with roughly two in three odds it reaches “very strong” status, the tier reserved for perhaps three or four events in the entire satellite era. Every major global model now projects a median peak in Super El Niño territory, and most of them project it exceeding the 2015-16 event, which until now held the modern record. Sea surface anomalies were already brushing the super threshold in mid-July, months before these events normally peak. The atmosphere has already shifted into El Niño mode, and the event is forecast to crest in late fall and early winter.
This is not about “climate change.” It’s about the standard cycles of weather, and the cycle we’re currently in is one that has likely devastated societies in the past. We’re better prepared as a society today, but not all Americans are equally prepared.
Serious households have started doing the quiet math on their own. Grocery bills tell part of the story, and the forecast maps tell the rest, which is why long-term food storage has moved from fringe hobby to mainstream line item in the family budget, with established suppliers like Heaven’s Harvest seeing demand from people who five years ago would have rolled their eyes at the idea. That instinct is not paranoia. It is pattern recognition, and the pattern is worth walking through carefully.
Editor’s Note: Heaven’s Harvest IS a sponsor, but the warnings of this article are real and would be written even if we didn’t have a survival food sponsor. With that said, those who take advantage of what they offer can use promo code “Patriot” for 15% off.
The Fertilizer Clock Is Already Running
While the Pacific warms, the second shock has been unfolding in the Strait of Hormuz. The conflict with Iran turned the world’s most important energy chokepoint into a contested waterway, and the consequences reach far beyond the gas pump. Roughly a third of global fertilizer trade moves through Hormuz, and the disruption sent urea prices up 86 percent year over year by March, with a 53 percent jump in a single month.
The World Bank projects energy prices rising about 24 percent in 2026 and fertilizer about 31 percent. By its own accounting, fertilizer prices ran 35 percent higher in the first five months of this year than the same period last year.
Here is the mechanism the nightly news will not explain. Fertilizer is not a grocery item. It is a time-delayed input. The nitrogen a farmer in Iowa or Punjab could not afford to apply this spring does not show up as a problem this spring. It shows up as a thinner harvest six to twelve months later.
The World Bank’s own food security brief concedes that the effects of reduced applications earlier this season “are likely to become visible only later in harvest outcomes.” Translate that from institutional language into plain English and it means this. The damage is already done, it is already in the ground, and we are simply waiting for it to arrive on the shelf.
Now check the calendar. Six to twelve months from the spring planting season lands us squarely in late 2026 and early 2027. Which is precisely when the strongest El Niño in the instrumental record is forecast to peak, bringing its signature droughts to Southeast Asia, Australia, southern Africa, northern Brazil, and South Asia, the very regions that grow the world’s rice, sugar, and oilseeds.
The World Bank warns openly that a strong El Niño “could disrupt multiple crop belts simultaneously” on top of the conflict-driven input costs. Their baseline projection assumes the Middle East disruptions ease by autumn. What in the last two years of Middle East history suggests that assumption is safe?
The System Has No Slack Left
The comfortable answer is that global markets always adjust. But adjustment requires slack, and the slack is gone. Global cereal production is expected to decline from last year’s records even before El Niño does its work. The UN World Food Programme, hardly a den of right-wing preppers, is calling this the most significant disruption to its supply chains since Covid and the invasion of Ukraine, and its supply chain director put the stakes bluntly.
Today’s supply chain challenges are tomorrow’s hunger crisis.
There is also a political dimension that markets cannot price. When food gets scarce, governments do not behave like economists. They behave like politicians. Export bans, hoarding mandates, and panic buying at the national level turned the modest rice shortfall of 2008 into a global crisis, and analysts are already warning that import-dependent nations are the first dominoes.
The 2015-16 Super El Niño, a far weaker event than what is now forecast, threw tens of millions into food stress across Africa and Asia. This one is projected to be stronger, and it arrives with fertilizer already rationed by price and shipping lanes already contested by missiles.
What Joseph Knew
Scripture does not treat preparation for lean years as faithlessness. It treats it as wisdom delivered in advance to those willing to act on it.
Behold, there come seven years of great plenty throughout all the land of Egypt: And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land of Egypt.
Joseph did not respond to that warning with a hashtag or a committee. He stored grain during the years of abundance, and when the famine came, Egypt stood while its neighbors begged. The lesson is not that famine is certain. It is that the time to prepare is precisely when preparation still looks optional.
Nobody who filled a pantry in a year of plenty has ever regretted it, and nobody standing in an empty aisle has ever been glad he waited for certainty.
None of this calls for panic, and panic is the enemy of sound judgment anyway. It calls for the same unglamorous prudence our grandparents considered ordinary. Keep some cash margin, know your local growers, and put real food in deep storage while it is cheap and available, because the entire arc of this story is that cheap and available is a closing window.
Families looking for a straightforward place to start can visit Heaven’s Harvest and use promo code Patriot for 15 percent off long-term storable food. The forecasts may yet soften, the strait may yet reopen, and we should pray they do. But hope is a fine thing to hold and a foolish thing to eat.
