New Update: Healthcare Costs Increasing by Over 60% in Some States. Will you be impacted?

Is the U.S. Economy Facing a Recession? Insights for Graybar Electric Employees and Retirees

In an early July poll, 58% of Americans said they thought the U.S. economy was in a recession, up from 53% in June and 48% in May. ¹ Yet many economic indicators, notably employment, remain strong. The current situation is unusual, and there is little consensus among economists as to whether a recession has begun or may be coming soon. ² As a Graybar Electric employee, it is imperative to keep track of current events that may affect your workplace.

Considering the high level of public concern, it may be helpful for Graybar Electric employees and retirees to look at how a recession is officially determined and some current indicators that suggest strength or weakness in the U.S. economy.

Business Cycle Dating
U.S. recessions and expansions are officially measured and declared by the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER), a private nonpartisan organization that began dating business cycles in 1929. The committee, which was formed in 1978, includes eight economists who specialize in macroeconomic and business cycle research. ³ As a Graybar Electric employee looking to allocate assets into the market, understanding the metrics for recessions and expansions is of utmost importance.

The NBER defines a recession as 'a significant decline in economic activity that is spread across the economy and lasts more than a few months.' The committee looks at the big picture and makes exceptions as appropriate. For example, the economic decline of March and April 2020 was so extreme that it was declared a recession even though it lasted only two months. ⁴

As a Graybar Electric employee, it is important to understand that to determine peaks and troughs of economic activity, the committee studies a range of monthly economic data, with special emphasis on six indicators: personal income, consumer spending, wholesale-retail sales, industrial production, and two measures of employment. Because official data is typically reported with a delay of a month or two — and patterns may be clear only in hindsight — it generally takes some time before the committee can identify a peak or trough. Some short recessions (including the 2020 downturn) were over by the time they were officially announced.5 This information is useful for Graybar Electric employees making investment decisions as it enlightens the concept of market timing and break down how information is circulated.

Strong Employment
As a Graybar Electric employee, you may have noticed how over the last few months economic data has been mixed. Consumer spending declined in May when adjusted for inflation, but bounced back in June. ⁶ Retail sales were strong in June, but manufacturing output dropped for a second month. ⁷ The strongest and most consistent data has been employment. The economy added 372,000 jobs in June, the third consecutive month of gains in that range. Total nonfarm employment is now just 0.3% below the pre-pandemic level, and private-sector employment is actually higher (offset by losses in government employment). ⁸

The unemployment rate has been 3.6% for four straight months, essentially the same as before the pandemic (3.5%), which was the lowest rate since 1969. ⁹ Initial unemployment claims ticked up slightly in mid-July but remained near historic lows. ¹⁰ In the 12 recessions since World War II, the unemployment rate has always risen, with a median increase of 3.5 percentage points. ¹¹ As a Fortune 500 employee, it is imperative to take advantage of this distinguishing metric and re-evaluate your outlook on the market and the economy.

Negative GDP Growth
As a Graybar Electric employee, it is important to know the common definition of a recession (a decrease in real gross domestic product (GDP) for two consecutive quarters), and how the current situation meets that criterion. Real (inflation-adjusted) GDP dropped at an annual rate of 1.6% in the first quarter of 2022 and by 0.9% in the second quarter. ¹² Because GDP is reported on a quarterly basis, the NBER committee cannot use it to measure monthly economic activity, but the committee does look at it for defining recessions more broadly. Understanding how a recession is defined is certainly beneficial for those in Graybar Electric companies as it allows for educated moves in the market during times where most retail investors are considerably more uncertain.

Since 1948, the U.S. economy has never experienced two consecutive quarters of negative GDP growth without a recession being declared. Despite that, as a Graybar Electric employee it is important to consider how the current situation could be an exception, due to the strong employment market and some anomalies in the GDP data. ¹³

Negative first-quarter GDP was largely due to a record U.S. trade deficit, as businesses and consumers bought more imported goods to satisfy demand. This was a sign of economic strength rather than weakness. Consumer spending and business investment — the two most important components of GDP — both increased for the quarter. ¹⁴

With that under consideration, those employed in Graybar Electric companies should consider how the Initial second-quarter GDP data showed a strong positive trade balance but slower growth in consumer spending, with an increase in spending on services and a decrease in spending on goods. The biggest negative factors were a slowdown in residential construction and a substantial cutback in growth of business inventories. ¹⁵ Although inventory reductions can precede a recession, it's too early to tell whether they signal trouble or are simply a return to more appropriate levels. ¹⁶ Economists may not know whether the economy is contracting until there is additional monthly data.

Featured Video

Articles you may find interesting:

The Inflation Factor
With employment at such high levels, it may be questionable to characterize the current economic situation as a recession. However, it's important for Graybar Electric employees to keep in consideration that the employment market could change, and recessions can be driven by fear as well as by fundamental economic weakness.

The fear factor is inflation, which ran at an annual rate of 9.1% in June, the highest since 1981. ¹⁷ Graybar Electric employees may notice how wages have increased, but not enough to make up for the erosion of spending power, making many consumers more cautious despite the strong job market. ¹⁸ If consumer spending slows significantly, a recession is certainly possible, even if it is not already underway.

Inflation has forced the Federal Reserve to raise interest rates aggressively, with a 0.50% increase in the benchmark federal funds rate in May, followed by 0.75% increases in June and July. ¹⁹ It takes time for the effect of higher rates to filter through the economy, and it remains to be seen whether there will be a 'soft landing' or a more jarring stop that throws the economy into a recession.

No one has a crystal ball, and economists' projections range widely, from a remote chance of a recession to an imminent downturn with a moderate recession in 2023. ²⁰ If that turns out to be the case, or if a recession arrives sooner, it's important for Graybar Electric employees and retirees to remember that recessions are generally short-lived, lasting an average of just 10 months since World War II. By contrast, economic expansions have lasted 64 months. ²¹ To put it simply: The good times typically last longer than the bad.

Projections are based on current conditions, are subject to change, and may not come to pass.

1) Investor's Business Daily, July 12, 2022
2) The Wall Street Journal, July 17, 2022
3–5) National Bureau of Economic Research, 2021
6, 12, 15, 21) U.S. Bureau of Economic Analysis, 2022
7) Reuters, July 15, 2022
8–9, 17–18) U.S. Bureau of Labor Statistics, 2022
10) The Wall Street Journal, July 14, 2022
11) The Wall Street Journal, July 4, 2022
13–14) MarketWatch, July 5, 2022
16) The Wall Street Journal, July 28, 2022
19) Federal Reserve, 2022
20) The New York Times, July 1, 2022

What steps must an employee take to ensure they accurately calculate their pension benefits when planning for retirement under the Electricians Pension Plan, IBEW 995? Employees need to understand the various factors that contribute to benefit calculations, including years of service credits, age, and any early retirement reductions. Participants should also familiarize themselves with the formulas outlined in the plan regarding Normal Retirement and Early Retirement benefits.

Employees under the Electricians Pension Plan, IBEW 995 can ensure accurate pension calculations by reviewing the plan's formulas, which consider factors like service credits, age, and early retirement reductions. The plan provides specific calculation methods for Normal and Early Retirement pensions, so employees should refer to their accrued credits and apply the appropriate formula based on the years of service to get a precise benefit estimate(Electricians_Pension_Pl…).

How does the Electricians Pension Plan, IBEW 995, treat periods of active service compared to breaks in service when determining eligibility for pension benefits? Employees should be aware that their length of service is critical to establishing eligibility, and any periods identified as breaks in service may impact their pension status. Understanding the definition and implications of breaks in service can be vital for maximizing retirement benefits.

Service periods under the Electricians Pension Plan, IBEW 995 are critical for pension eligibility and accrual. Breaks in service, defined as periods where an employee is not credited with at least 250 hours in a plan year, can disrupt benefit accrual and participation. However, the plan provides grace periods for specific situations such as disability or maternity, preventing these gaps from affecting eligibility(Electricians_Pension_Pl…).

What are the implications of returning to work after starting to receive benefits under the Electricians Pension Plan, IBEW 995, and how can it affect ongoing pension payments? It's important for employees to recognize the conditions classified as "Disqualifying Employment" that can lead to suspending their pension benefits. Knowing how working while receiving benefits influences the plan can help retirees make informed decisions about their post-retirement employment.

Returning to work after starting to receive benefits under the Electricians Pension Plan, IBEW 995 can result in a suspension of benefits if the work qualifies as "Disqualifying Employment." Employees should check the plan’s definitions to see if their employment will affect their pension payments. Generally, working over 40 hours per month in covered employment or similar trades can trigger a suspension(Electricians_Pension_Pl…).

In what ways can an employee's spousal status influence the benefits they receive from the Electricians Pension Plan, IBEW 995? Employees need to understand how their marital status affects pension distributions, including survivor benefits and waivers. This knowledge is crucial for planning, as certain benefit structures depend significantly on whether the participant has a qualified spouse.

Spousal status significantly affects the distribution of benefits under the Electricians Pension Plan, IBEW 995. If an employee is married, the default pension option is the Joint and Survivor Annuity, which provides a continued payout to the spouse upon the participant’s death. The plan also outlines the necessary waivers and consents required for changing these benefits based on marital status(Electricians_Pension_Pl…).

How do changes in the Internal Revenue Service (IRS) regulations affect the contribution limits and benefit payouts related to the Electricians Pension Plan, IBEW 995? Employees should keep informed on the most current IRS guidelines, as they directly influence how benefits are calculated and dispersed. Awareness of IRS limits can prevent unexpected tax penalties and ensure compliance with pension law.

IRS regulations play an important role in determining contribution limits and payout structures under the Electricians Pension Plan, IBEW 995. Changes to IRS rules may affect the maximum allowable benefits and tax treatments. Employees should keep up to date with IRS guidelines to avoid potential tax penalties and ensure their pension plan remains in compliance(Electricians_Pension_Pl…).

What documentation is required for employees to maintain their eligibility for pension benefits under the Electricians Pension Plan, IBEW 995, especially after significant life events such as marriage, divorce, or disability? Employees must notify the plan office of life changes and provide necessary documentation. Understanding what these documents are and how they should be submitted is crucial for maintaining eligibility and accessing benefits.

Significant life events such as marriage, divorce, or disability require timely submission of documentation to the Electricians Pension Plan, IBEW 995 to maintain eligibility. This may include marriage certificates, divorce decrees, or proof of disability. Employees should contact the plan office to ensure all required paperwork is properly submitted to avoid interruptions in benefits(Electricians_Pension_Pl…).

What processes are in place for employees to appeal a denial of benefits under the Electricians Pension Plan, IBEW 995, and what timelines must they adhere to? Employees should be aware of their rights under ERISA concerning claims and appeals, including the time limits for submitting appeals. This knowledge ensures they are equipped to address any potential issues they may encounter during the pension claim process.

If a claim for benefits is denied, the Electricians Pension Plan, IBEW 995 provides an appeals process. Employees must file a written appeal within 60 days of receiving the denial notice. The appeal should include any relevant documentation, and employees should follow the timeline and procedures outlined in the plan to ensure proper consideration of their case(Electricians_Pension_Pl…).

How can employees determine if their employer is meeting its financial obligation to the Electricians Pension Plan, IBEW 995, particularly regarding contributions? Understanding the mechanisms for verifying employer contributions can help employees ensure that they are accruing the appropriate benefits. Employees should know whom to contact and what reports they can access to gather this information.

Employees concerned about their employer meeting its contribution obligations to the Electricians Pension Plan, IBEW 995 can contact the plan’s administrative office for verification. The plan allows participants to access contribution reports to confirm that employers are properly crediting their accounts(Electricians_Pension_Pl…).

What resources are available through the Electricians Pension Plan, IBEW 995, for employees seeking to enhance their understanding of their retirement options and benefits? Employees should seek detailed information provided through the plan documents and know how to access educational resources, such as workshops or one-on-one sessions with plan administrators. Utilizing available resources ensures they are making informed decisions about their retirement.

The Electricians Pension Plan, IBEW 995 offers various resources to help employees understand their retirement options. These include the plan’s summary description, workshops, and individual consultations with plan administrators. Employees should make use of these tools to gain a clear understanding of their pension and plan effectively(Electricians_Pension_Pl…).

How can employees contact the Electricians Pension Plan, IBEW 995, for additional questions or clarification regarding their retirement benefits or the plan's provisions? It is essential for employees to know how to reach the plan's administrative office or the Board of Trustees for inquiries. Understanding the contact methods, including phone numbers and office addresses, greatly aids in effective communication when navigating retirement planning. These questions are framed to guide employees in understanding their rights and responsibilities as they prepare for retirement under the Electricians Pension Plan, IBEW

For additional questions or clarification regarding the Electricians Pension Plan, IBEW 995, employees can contact the plan's administrative office at the provided phone number or address. The office offers support for all queries related to pension benefits, eligibility, and documentation(Electricians_Pension_Pl…).