Since the White House just updated its definition, the Biden administration may anticipate avoiding the r-word. Or so it thinks.
While some think that two consecutive quarters of declining real GDP represent a recession, according the White House, this is neither the accepted definition nor how economists measure the business cycle’s health.
“Instead, both official recession declarations and economists’ assessments of economic activity are based on a more holistic examination of the data—including the labor market, industrial production, consumer and business spending, and incomes. According to these numbers, it’s unlikely that this year’s GDP drop in the first quarter—even if it is followed by another GDP decrease in the second quarter—shows a recession. ”
On Meet the Press on Sunday, Treasury Secretary Janet Yellen said: “A typical definition of a recession is two consecutive quarters of GDP contraction.”
“Many economists believe that second quarter GDP will be negative,” she concluded. “The first quarter’s GDP was negative.”
According to the Bureau of Economic Analysis, GDP decreased at a rate of 1.6 percent in the first quarter of 2022. They go on to say that “Real GDP rose 6.9 percent in the fourth quarter of 2021.”
Many have argued that this hoax appears to be a cheap attempt by the Biden administration to get ahead of some bad news in the near future.
Despite the fact that Yellen recently stated that the Biden administration was mistaken in its inflation expectations in the past, she acknowledged that the standard definition for “recession” is a pair of GDP reports in a row showing a decrease. And that the US saw a Q1 recession.
The disconnect between the White House and everyday Americans has been further emphasized by recent reports from Bloomberg that “nearly one-third of people believe the economy is in a recession now.”