New research suggests that the U.S. economy has been in a recession for the last two years if one adjusts the statistics used for inflation, reports Epoch Time.

According to Bureau of Labor Statistics data, cumulative inflation since 2019 has totaled nearly 25 percent. But inflation figures have been understated by nearly half, resulting in cumulative growth to be “overstated by roughly 15%,” say economists EJ Antoni and Peter St. Onge.

“. . . these adjustments indicate that the American economy has actually been in recession since 2022,” they wrote in a new study published in Brownstone Journal.

Undercounting inflation has implications for economic growth because rapid price changes have bolstered the nominal values of a wide array of economic metrics “without resulting in any real change.”

New orders for durable goods have increased 7.5 percent (nominal) but fallen 13.4 percent (real). Retail sales have rocketed more than 23 percent (nominal) but rose 3.2 percent after adjusting for inflation. Nominal disposable personal income has surged about 35 percent, but the real rate has been just nearly 13 percent.

Nominal GDP at a seasonally adjusted annualized rate shows the national economy has soared 37.4 percent from the first quarter of 2019 to the second quarter of 2024. But the way the Bureau of Economic Research evaluates those figures is “flawed,” report the economists.

Utilizing more accurate measures for housing, regulatory costs, and indirect costs yields a more accurate inflation measurement and therefore a more accurate valuation of real GDP, say the researchers.

Antoni and St. Onge conclude that the adjusted real GDP (gross domestic product) fell 2.5 percent from the first quarter of 2019 to the second quarter of 2024, which means that the nation entered a recession in the first quarter of 2022 and remained in that contraction through the second quarter of 2024.

The paper aimed to address various “egregious biases in inflation statistics” to gauge an accurate assessment of inflation over the last five years.

“The CPI has grossly underestimated housing cost inflation,” they wrote, highlighting that the consumer price index (CPI) fails to “actually account” for the direct cost of homeownership. Instead, federal statisticians rely on the “owners’ equivalent rent of residences,” which accounts for more than 26 percent of the CPI.

“If the costs to rent and own change commensurately over time, then this methodology will be relatively accurate,” the economists stated. “Unfortunately, the cost of owning a home has risen much faster than rents over the last four years and the CPI has grossly underestimated housing cost inflation.”

Measuring price changes when consumers are not directly charged for services is another challenge to accurately measuring inflation.

Health insurance is one example of this hurdle to correctly assessing inflation.

“Premiums are used both to pay for the actual cost of providing the service of insurance (risk mitigation) and for medical services and commodities,” the report said. “The CPI neglects both, and instead imputes the cost of health insurance from the profits of health insurers.”