THE standard definition of a recession is when the gross domestic product (GDP) of an economy sinks for two consecutive quarters. The additional three months is an economist’s dispensation to initial contraction. Even for politicians and presidential appointees, that should be easy enough to understand.

There seem to be three sides on whether we are already in a recession or fated to sink into one. One is the pessimist’s, a stance taken by many struggling with the economy’s unabated shocks; the other, from optimists, a position that mixes a sycophant’s political populism with homey feel-good soundbytes in preparation for future electoral forays; and the last is what the data tell us.

The first, taken by most creditors and external rating agencies and computed from official first-quarter results as well as second-quarter trends, says we will inevitably sink into one. Whether or not that is an accurate reading matters less than the fact that these agencies are credible, apolitical and can influence creditors, prospective investors and those heavily invested in our economy.

A rating agency that declares imminent recession somewhat self-fulfills when creditors and potential investors cancel or suspend cash flows, further fueling an imbalance. After its complicity in the NBN-ZTE and the Northrail projects, and Ralph Recto’s hand in the expanded valued-added tax (E-VAT), the National Economic and Development Authority (Neda) may deny recession lurks, but few will listen.

In an economy shorn of confidence and credibility, little can substitute for the analysis of such agencies as Moody’s, Standard & Poor’s or the International Monetary Fund-World Bank, which measure not simply two quarters of contraction, but aggregate supply and demand, measuring the elasticity of prices to resurrect an economy from economic shocks—infinitely critical to understanding recession, resilience and the recovery period required to return to full-employment output, the economic ideal.

Price burdens prevent demand from rising enough to recover from a recession. On that aspect let us postulate that the effect on overall prices by the government’s refusal to grant tax breaks, the finance department’s adherence to perpetuating predatory E-VAT, aberrant royalties, our vulnerability to high-tariff multipliers, and the propensity to cook up ludicrous taxes to sustain an expensive bureaucracy and fatten campaign coffers damages what recession resiliency we might have.

First, the data. Seasonally adjusted GDP fell by 2.3 percent, the lowest since emerging from the Marcos years. That’s a contraction. At constant prices, first-quarter GDP registered a 0.4-percent growth down from 3.9 percent. Unfortunately, the reporting lag from agriculture, fisheries and forestry, where a 2.1-percent growth was posted, is slowest where the full impact of the global financial crisis’s downward pull on aggregate demand would likely impact in the second quarter. Worse, because this sector accounts for 19.4 percent of total domestic production, when seasonally adjusted, this sector actually contracted by 1.0 percent with the declines in “other crops,” corn and sugarcane.

Our fallback services sector posted 1.4-percent growth, a decline of 2.1 percent. As services account for 49.8 percent of GDP, the writing on the wall cannot be ignored. When seasonally adjusted, services grew less than 1.0 percent in each of the last five quarters.

Our industrial sector, which includes construction and accounts for 30.5 percent of GDP, fell by 2.1 percent. Sycophants who say catch-up infrastructure spending will result in GDP growth should note the arithmetic.

The deficit is ballooning. Neda says the Economic Resiliency Program (ERP) will be aggressive this second quarter. But ERP numbers don’t show significant expenditures; rather, a deepening deficit with infrastructure spending anemic and less than 20 percent of total government spending.

Moreover, total construction accounts for less than 2 percent of GDP. Even government consumption spending at merely 6 percent of GDP is ineffectual, especially as the deficit forces us into expensive samurai bonds likely to be partially drawn this September, too late to forestall a recession.

The seasonally adjusted data show recession is here, given declining export revenues, a significant contributor to GDP; the second-quarter increase in petroleum prices, an across-the-board price multiplier that keeps prices high; and the spending dampeners from seasonally mediocre mid-year remittances and increasing unemployment. State propaganda may tout sundry successes, but per-capita GDP declined by as much as 1.5 percent where the per-capita output in strife-torn Angola is now twice the Philippines’.

When domestic output falls and firms retrench, the loss of jobs spells inability to support families. Economists use the concept of full-employment output as a measure of a well-managed economy. Our GDP crash may not reflect the decline in quality of life, but it forebodes unrest when it goes from a high of 6.1-percent growth (as boasted in initial budget assumptions), to minus 0.5 percent calculated by rating agencies and creditors.

In a recession, aggregate demand falls while overall price levels, slow to react when afflicted with additives, remain high. Growth reverses into recession due to the inverse relationship between price levels and aggregate demand where, at high prices, people would rather buy at low-output levels. Inversely, by lowering overall prices, demand recovers and growth is resurrected as output responds.

Economists depict the alternating output as peaks and troughs along a diagonal representing long-run average growth. If it is possible to visualize that graph, one can conclude that competent economic management means making the long-run average growth line as steep as possible while reducing the distances between recession and recovery on the weaving line. By reducing the period between recession and recovery, economic managers reduce unemployment and the suffering it causes. Hence, the term full-employment output.

Remember our postulate on what damages resiliency? Beyond Neda’s recession denials, it is price adjustments that will deliver us from a recession and return economies to producing at full-employment output.

Recession is fait accompli. Unfortunately, high prices tend to make recession linger. To shorten the period to recovery, government must revise policies that squeeze blood from stone. It does not do that by refusing tax breaks, or perpetuating predatory taxes and aberrant royalties on economic multipliers like energy tariffs; or imposing additional consumer taxes.