but because the government cant measure the economy perfectly the two indicators can diverge and recently they have diverged by a lot in the first quarter gross domestic product fell at an annual rate of 16 while gross domestic income grew at an annual rate of 18boragan aruoba a university of maryland economist who has studied the two measures said he trusted the income data more because the government has better data on income than on spending he believes that the production data will eventually be revised to be closer to the income data meaning the economy probably didnt shrink in the first quarter at allanother option recommended by the commerce department is to use the average of the two measures rather than choose one by that measure the economy grew slightly in the first quarterhow will we know when a recession beginsthe dating committee lists several indicators that it usually watches when declaring recessions although it reserves the right to consider others most show that the economy is still growing although more slowly than last yearconsumer spending for example grew at a solid 18 annual rate in the first quarter adjusted for inflation and most forecasters believe it grew in the second quarter too albeit more slowly job growth has remained robust other measures such as industrial production and inflationadjusted income have stalled in recent months but havent fallen significantlythose indicators are backwardlooking however to assess conditions in real time forecasters typically look at other measures that have historically been better at showing the economys direction the pandemic has made that more difficult however by scrambling typical patterns in spending and investmentits harder than usual to read the economy because were still in such an odd period said karen dynan a harvard economist and former treasury department official under president barack obama were seeing this postcovid reorganization of the economy in addition to the loss of momentum so the signals arent cleanfor example dynan said auto sales were usually a reliable signal of a slowing economy because cars were a major purchase that consumers could put off if they were worried about losing their jobs but supplychain disruptions have depressed auto sales during the pandemic making the data hard to interpret if sales pick up in coming months for example does that suggest rising consumer confidence or simply better availability of carsstill forecasters said there were some numbers they would be watching closely most important the job market recessions almost by definition result in lost jobs and increased unemployment and increases in unemployment even fairly small ones nearly always signal a recessionthe number of unfilled job openings has fallen a bit from record highs at the end of last year according to data from the career site indeed filings for unemployment insurance an indicator of layoffs have risen a bit in recent weeks if those trends continue a recession will seem more likely said aneta markowska chief financial economist for jefferies an investment bankbut markowska said