The White House spent many days preparing for bad news about the economy, and trying to counter one of its unofficial definitions. The panic grew when the news finally arrived Thursday morning. Administration officials doubled down on the declaration that the U.S. was not in recession.
Thursday’s Gross Domestic Product report showed that 0.9% of the country’s economy contracted. This is the second consecutive quarter of economic decline, and it meets one of the most commonly used, but not only, definitions for a recession.
In the days preceding the report’s release, White House officials leapt into action and went on network to inform the nation that there was no sign of recession and that the economy remains strong.
White House press Secretary Karine Jean Pierre spent the week answering questions from the media. Throughout the week, she repeatedly declared that a second straight quarter of decline is “not the definition” of a recession. She also declined to give details about the official definition of recession by the Administration, but only noted that the NBER uses indicators.
The NBER is an independent group of economists who investigate and give analyses on “major economic issues,” according to the non-profit’s website.
Brian Deese (Director of the National Economic Council) also appeared on Monday to counter the recession fear. On Monday, Deese appeared on CNN and argued that the GDP report will not show a recession. He also highlighted the number of jobs created by President Joe Biden.
“Never has there been a recession in which the economy is creating jobs,” Deese stated to the network. “It’s certainly not a recession according to the technical definition,” Deese said. The technical definition includes a wider range of data points. But in practical terms, what matters to the American people is whether they have a little economic breathing room, they have more job opportunities, their wages are going up — that has been Joe Biden’s focus since coming into office.”
Meanwhile, the White House Council of Economic Advisers put out a blog post on July 21 declaring “that two consecutive quarters of falling real GDP” does not equal a recession.
“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,” the council wrote. The council wrote that “Recession probabilities never become zero” and added, “While some believe two consecutive quarters of falling real GDP constitute a recession, it is not the official definition nor the way economists evaluate the state of the business cycle.” She told NBC’s Chuck Todd on Sunday that this is “not the technical definition” and later said she’d be “amazed if they [NBER] would declare this period to be a recession.”
The doubling down continued after the release of Thursday’s report. Biden released a statement stating that the U.S. was “on the right track” despite Thursday’s data. He said the Federal Reserve had made moves to “lower inflation” as a result of last year’s “historic economic growth “. The word recession was not mentioned in his statement. However, the president later elaborated on the argument during comments to the nation.
White House Economic Advisor Jared Bernstein repeated Biden’s optimistic spin on Fox News, just hours after the GDP data was released. Bernstein stated to the network that there had been no attempt by the government to take advantage of the data from Thursday earlier in the week.
“I think it’s a statement of the way these measures are scored by the group that decides whether we’re in a recession or not … Secretary Yellen is correct,” Bernstein said, referring back to one of Yellen’s arguments that a recession is not “inevitable.”
“When you’re adding 1.2 million jobs in a quarter, over 2 million in the first half of the year, it’s simply inconsistent with a recessionary call,” Bernstein continued.
Economists speaking to The Daily Caller said that two consecutive quarters of decline have become an informal indicator of a recession. However, there is some discussion about whether or not the U.S. currently faces a recession. I think that the White House argument is weak. Although the exact definition of recession has yet to be established, it is well known that when there are two or more quarters in which economic output is declining, it is a sign of recession,” Steve Pociask (president and CEO, American Consumer Institute) told Daily Caller. All economists need to be familiar with the simple statistic that two consecutive quarters of negative economic output is indicative of a recession.” he said. Pociask raised the argument of the administration, saying that NBER economists would “come together to determine the starting point and end date for this recession.” It’s weak arguments they’re making [by the White House]. Nearly every economist would agree with Pociask that it is a weak argument they are making. Later, Pociask noted that the argument still has a little bit of room for improvement.
Brian Riedl, a senior fellow focused in part on economic policy at the Manhattan Institute, told the Caller that “of course” the White House will argue that the country isn’t in a recession. Riedl said he believed we were “probably not experiencing a recession at the moment .”
” GDP is down very little, but other indicators like jobs are still strong and this probably doesn’t meet the technical definition for a recession. He explained that there was a possibility of GDP growth being revised up into positive territory in the coming months.
I think the conservatives are right to feel frustrated by this debate. Because I think that if they were elected president of the United States, it’s unlikely they would give the benefit the doubt. Riedl stated that the media would be screaming for recession if there were a Republican President, even though it technically isn’t.
While Riedl explained to the Caller why he doesn’t see the country as currently being in a recession, he also noted that two quarters of negative decline is “the shorthand definition” of a recession.
Ultimately, however, many of the economists the Daily Caller spoke with felt the argument of whether the country is officially in a recession or not should not be the main focus. (RELATED: Are We In A Recession? It Doesn’t Matter To Americans Who Are Hurting, Economists Say)
“Whether or not we’re technically in a recession is really secondary to the fact that real wages have fallen 3.6%, people with fixed incomes have been hit with 9.1% inflation eating away at their wealth and people are really struggling. Riedl stated that it doesn’t matter if the recession is technically declared.
You can call this a recession or not, but it does change the fact that grocery, gasoline, and other essentials are so much more costly… and that families are clearly falling behind, and their wages aren’t keeping pace.” he said. Pociask also agreed with this view. He said he could “see” the argument of the administration but it shouldn’t be something that the White House should lead.
“It’s just completely insensitive to the fact that what consumers care about right now is inflation … even the recent decline of 50 cents or so with gasoline, that’s not going to be enough to stop the spiral,” Pociask said.