As the gathered economic data seems to suggest, the United States is right on track for a recession, the White House published a blog post near the end of last week that attempted to discredit the rule-of-thumb recession definition.
One nonprofit entity generally recognized as the country’s business cycle scorekeeper, the National Bureau of Economic Research, defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.” Despite the fact that the group goes over economy-wide data such as real personal income, employment, and personal consumption expenditures in order to help find out the length of business cycles, the marketplace has created a rule-of-thumb definition that records the overall severity and breadth of recessions — two consecutive quarters of negative gross domestic product (GDP) growth.
The United States is slated to meet this particular definition due to the economy shrinking at a 1.5% annualized rate over the first quarter of the current year and seems to be on track to contract at a 1.6% rate over the second quarter. As the U.S. Bureau of Economic Analysis prepares itself to publish an advance estimate about second-quarter growth later this week, the Biden administration is already taking steps to start damage control.
“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,” explained the White House in another blog post sent out on Thursday. “Instead, both official determinations of recessions and economists’ assessment of economic activity are based on a holistic look at the data — including the labor market, consumer and business spending, industrial production, and incomes. Based on these data, it is unlikely that the decline in GDP in the first quarter of this year — even if followed by another GDP decline in the second quarter — indicates a recession.”
As the approval rating of Old Uncle Joe continues its downward spiral, this news of a probable recession would by no means help the odds for Democrats in the soon-to-happen midterm elections — especially as those with the White House have insisted, quite repeatedly, that the country is “stronger economically than we have been in history.” The All-America Economic Survey from CNBC, for example, highlighted recently that just a scant 30% of the American public approves of Biden’s economic performance, while Republicans are now in a position that could end up giving them another 70 seats within the House of Representatives.
“The Biden administration is trying to move the recession goalposts from the traditional definition of two consecutive quarters of negative economic growth to pretend the economy is not in a recession,” stated Alfredo Ortiz, the CEO of the Job Creators Network, in a release. “This is a desperate attempt to prevent Biden from being labeled a recession President, which would further hurt Democrats’ chances in the midterm elections this fall.”
The White House made the claim that the various selections of data used by the National Bureau of Economic Research — including nonfarm payrolls, real personal consumption expenditures, industrial production, and real income minus government payments — have ended up flat lining instead of declining due to COVID and the lockdowns that ensued due to it. However, other economic data — including consumer sentiment and real earnings — label the economy as deeply impacted by record inflation and pervasive supply route issues.
“Historic inflation, a declining labor force, cratering financial markets, and record-low consumer confidence only bolster recession indications,” explained Ortiz. “No matter how the administration tries to slice it, the economy is in recession. And the Biden administration only has itself to blame.”