is it possible to go through a surplus AND a reccession simultaniously?

Question

i'm working on a debate case for school, and it would be helpful to know this information. to tell you the truth, it would help my case if the a recession and surplus can coexist, but i have some doubts.

what do you say?

Answer 1

Which surplus? Trade or budget? Either way, it's very possible; the U.S. had both budget surplus and a moderate trade surplus throughout the Great Depression.

Budget surplus is generally contractionary; other things being equal, having a budget surplus means lower growth. In fact, it is possible to engineer a recession by having a large budget surplus.

Trade surplus/deficit, on the other hand is largely irrelevant to the performance of the domestic economy, unless it is heavily dependent on exports of one commodity or several related commodities.

Answer 2

Yep it happened not long ago, in the latter half of 2001. The U.S. entered a recession while the gov't was still running a surplus. (There is some debate as to whether that really counts as a recession, but it's close enough to prove the point).

But yeah, all we'd have to do is significantly raise taxes right now, and within a couple months it's a lock we'd be having both a surplus and a recession.

Answer 3

What do you mean by a surplus? If you are more specific, I can help you. A recession is defined as two quarters of declining Gross Domestic Product (GDP). Many people focus more on the unemployment that is associated with a recession. If you mean a government budget surplus, that would be entirely possible, although not wise. This would simply mean that the government was taking in more in taxes than it was spending--this might even be the cause of a recession!