The Biden administration has led a coordinated campaign to dismiss the technical definition of a recession ahead of Thursday’s anticipated gross domestic product numbers, which are expected to confirm that the US is already, in fact, in a recession.
The recession downplaying began last week when the White House Council of Economic Advisers declared in a blog post on July 21 that “While some maintain that two consecutive quarters of falling real GDP constitute a recession, that is neither the official definition nor the way economists evaluate the state of the business cycle.”
Treasury Secretary Janet Yellen then joined NBC News’ “Meet the Press” over the weekend, where she acknowledged that “the economy is slowing down” but reiterated the administration’s talking points.
“This is not an economy that’s in recession,” Yellen said. “But we’re in a period of transition in which growth is slowing.”
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White House economic adviser Brian Deese echoed the treasury secretary on Tuesday, telling reporters that “the definition of recession – which has been an issue that I know many of you have reported on as Secretary Yellen said on Sunday – two negative quarters of GDP growth is not the technical definition of recession. It’s not the definition that economists have traditionally relied on.”
Several press outlets jumped on board with the administration’s messaging.
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Everyone agrees that the National Bureau of Economic Research (NBER) is the arbiter that makes the final determination of whether the economy is in a recession. But the panel does not meet regularly and typically waits up to a year to call it.
In the meantime, the technical criteria for a recession is two consecutive quarters of negative growth.
Liberal economist Paul Krugman appeared to acknowledge as much in a tweet promoting his latest New York Times op-ed on Wednesday when he urged Americans to “ignore the two-quarter rule.”
Krugman’s message was retweeted by White House chief of staff Ron Klain.
The NBER has stressed that it relies on more than GDP in determining whether there is a recession, which its website describes as a “significant decline in economic activity that is spread across the economy and that lasts more than a few months.”
But if Thursday’s GDP numbers confirm a second straight quarter of negative growth, the NBER would break quite a pattern if it later determined that the US was not in a recession in the first half of 2022.
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As American Enterprise Institute director of economic policy studies, Michael Strain, points out, each of the last 10 instances of two consecutive quarters of GDP contraction in the US have been declared recessions.
FOX Business’ Megan Henney contributed to this report.