A lot of people on Wall Street are convinced that GDP will go negative again next week, but there’s a little more controversy around whether the government’s economists will formally call a recession. After all, any two consecutive quarters of negative growth is as clear a recession signal as it gets, right?

Definitely. But it takes a lot of drag to keep the U.S. economy down and there are often short-term pivots along the way. A down quarter can be followed by an up one. Sometimes the slowdowns are brief and shallow.

And sometimes the economists jump the gun. Back in 2001, GDP dipped in Q1 and Q3 and actually rebounded in Q4 after the initial 911 shock receded . . . but because Q4 wasn’t quite as strong as Q2, it was ruled a recession anyway.

By Q1 2002, the economy had recovered all lost ground and more. With GDP once again in record territory, the NBER had no real choice but to declare the recession over. That’s all it took. After that, it was nothing but quarter-to-quarter growth until things started falling apart in early 2008.

A similar pattern emerged. Q1 was the first wobble, with the economy contracting 0.4% in real terms, then surging 0.5% in Q2. The economists called the recession after the first contraction . . . and then declared it over the first chance they got.

The 2008 crash bent a few rules, most notably the notion that a recession officially continues until the economy has recovered all lost ground. It took until the end of 2010 for GDP to get back into record territory, well over a year after the recession formally ended.

The moral there is fairly simple. Sometimes the formal beginning and end of the cycle don’t match the way people feel or even the way the numbers stack up. Recession is just another word.

Granted, it’s a word that signals substantial and widespread economic stress. It’s not fun. Unemployment usually surges because corporate profits weaken and management decides to make sacrifices. Some industries feel it worse than others.

But in the grand scheme of things, massive contractions like what we saw in 2008 and again in the COVID lockdowns are extremely rare. Most are a lot more like the ones we’ve dissected previously . . . the 1990 wobble, the 1980-1 double dip, the long malaise of the early ’70s.

Investors survived all of those. My research even shows that buying IPOs in a recession is a historically solid approach, even in a deep recession.

And sometimes one weak quarter doesn’t qualify as a recession at all. If you dumped your stocks on the first GDP dip, you would have slept through 2011 and the first half of 2014. The first one wouldn’t have earned you much, but you wouldn’t have lost anything either.

Sitting out early 2014 after a bad winter print (remember the polar vortex?) would have cheated you out of 6% in 6 months on the S&P 500, which isn’t a bad return at all. It’s about average.

The big money thinks we’ll get at least a little rebound on GDP growth next week. The headline number will probably still come in below last quarter in real terms. What do we do with that?

The challenge is that Q221 was mighty good in year-over-year terms and the bar is set mighty high. And it’s reported in real terms, so every dollar a year ago was worth 9% more than it is now. Factor that into the math, and even a scant increase is actually amazing.

I’m not ruling the American people out yet. If they show signs of faltering, the Fed will cut rates . . . like they did in 2007, well before a recession was even announced.

Either way, for this to start hurting the American people, we need to see job destruction. People need to get laid off and not be able to find another position immediately.

That hasn’t happened yet. Instead we’re seeing the biggest hiring rates since 1999 . . . when wage inflation was Alan Greenspan’s biggest concern. Wage inflation doesn’t stop until job creation does.

We’re a long, long way from that point. NBER called the 2008 recession nine months after the job creation numbers went negative for the first time. On that basis, there might not be a 2022 recession at all.

There might be one in 2023. But think back to 2014. Do you want to give up the chance to keep making money in the market because we might be 6-12 months out from a steep slowdown?