Biden Administration Tries To Explain Away Harsh Economic Realities By Redefining ‘Recession’

After The First Quarter Of Negative GDP Growth, President Biden Claimed He’s ‘Not Concerned About A Recession’

QUESTION: “Sir, how concerned are you about a recession, given the GDP report today showed a contraction of 1.4 percent in the first quarter?”
PRESIDENT BIDEN: “Well, I’m not concerned about a recession. I mean, you’re always concerned about a recession, but the GDP, you know, fell to 1.4 percent.” (President Biden, Remarks, 4/28/2022)

PRESIDENT BIDEN: “We’re not going to be in a recession in my view… My hope is we go from this rapid growth to steady growth, so we’ll see some coming down. But I don’t think we’re going to, God willing, I don’t think we’re going to see a recession.” (“Biden: ‘God Willing, I Don’t Think We’re Going To See A Recession,’” The Hill, 7/25/2022)

But Now ‘President Joe Biden’s Administration Is Downplaying Data Due This Week That Could Show The US Economy Contracted For A Second Straight Quarter -- A Development That Would Match One Standard Definition Of A Recession’

“President Joe Biden’s administration is downplaying data due this week that could show the US economy contracted for a second straight quarter -- a development that would match one standard definition of a recession. The administration’s message: a ‘technical recession’ isn’t necessarily a real one. At stake is winning a political-messaging battle with Republicans over how effective Biden’s policies have been in spurring a post-pandemic recovery.” (“Biden Team’s Take on ‘Technical Recession’: It’s Not a Real One,” Bloomberg, 7/25/2022)

• “Biden’s aides, including Treasury Secretary Janet Yellen, have fanned out in recent days in preparation for Thursday’s quarterly gross domestic product data, explaining that the formal definition of a recession is complex and runs deeper than simply two quarters of negative growth. … Deese even took issue with the characterization of two quarters of GDP declines as a ‘technical’ recession -- terminology that’s used widely by economists and investors alike.” (“Biden Team’s Take on ‘Technical Recession’: It’s Not a Real One,” Bloomberg, 7/25/2022)

“Next Thursday, the Commerce Department will release its initial estimate of second-quarter growth. President Biden’s economic advisers are trying to lay down a marker now. They say that even if the number turns out to show a second straight quarter of negative growth, the U.S. economy was almost certainly not in a recession in the first half of this year. … [T]he White House is seeking to preempt heightened recession chatter that would accompany two quarters of shrinking GDP.” (“White House: Even If GDP Contracted, It’s Not A Recession,” Axios, 7/21/2022)

And So Biden’s Economic Team Has Dutifully Deployed To Try To Convince Americans That Economic Data That Has Traditionally Indicated A Recession Doesn’t Really Mean That

TREASURY SECRETARY JANET YELLEN: “Well, I look at all the data. And GDP will be closely watched. A common definition of recession is two negative quarters of GDP growth, or at least that’s something that’s been true in past recessions. When we’ve seen that, there has usually been a recession. And many economists expect second quarter GDP to be negative. First quarter GDP was negative. So we could see that happen. And that will be closely watched. But I do want to emphasize: What a recession really means is a broad-based contraction in the economy. And even if that number is negative, we are not in a recession now. And I would, you know, warn that we should be not characterizing that as a recession –”
NBC’s CHUCK TODD: “I understand that, but you’re splitting hairs. I mean, if the technical definition is two quarters of contraction, you’re saying that’s not a recession?”
YELLEN: “That’s not the tech –”
TODD: “No?”
YELLEN: “That’s not the technical definition. There’s an organization called the National Bureau of Economic Research that looks at a broad range of data in deciding whether or not there is a recession. And most of the data that they look at right now continues to be strong. I would be amazed if the NBER would declare this period to be a recession, even if it happens to have two quarters of negative growth.” (NBC’s “Meet the Press,” 7/24/2022)

CNN’s JOHN BERMAN: “It sounds like you’re anticipating what will be comments from some saying two quarters of negative growth in a row. That’s a recession.”
BRIAN DEESE, Director of the National Economic Council: “Right. And certainly, in terms of the technical definition, it’s not a recession, the technical definition considers a much broader spectrum of data points.” (CNN, 7/25/2022)

CNN’s PAMELA BROWN: “Okay, what I took away from your long answer, just to be precise, if the numbers come out and decline next week, the White House will still not consider this country being in a recession. That’s what I’ve heard from you.”
JARED BERNSTEIN, White House Council Of Economic Advisers: “No, no. If that’s what you took away, let me clarify.”
BROWN: “Okay, because what I heard from you is you’re going to take the other definition of a recession.”
BERNSTEIN: “It’s not a definition we’re taking. The official Business Cycle Dating Committee, they’re the ones who declare recession, not the White House and they do it after the fact because the data come in months and quarters later.” (CNN, 7/23/2022)

WHITE HOUSE COUNCIL OF ECONOMIC ADVISORS BLOG: “What is 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. Instead, both official determinations of recessions and economists’ assessment of economic activity are based on a holistic look at the data … 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.” (“How Do Economists Determine Whether the Economy Is in a Recession?,” The White House Council of Economic Advisors Written Materials, 7/21/2022)

REMINDER: ‘The Working Definition For A Recession Is Two Consecutive Quarters Of Negative Growth’

BLOOMBERG NEWS: “The working definition for a recession is two consecutive quarters of negative growth.” (“US Economy Careens Between Glee and Gloom With Each Data Release,” Bloomberg, 7/14/2022)

THE WASHINGTON POST: “The shrinkage fueled fears that a recession — defined as two consecutive quarters of negative growth — could be on the horizon, as the Fed tees up as many as seven rate hikes this year.” (“Why The U.S. Economy Shrank,” The Washington Post, 4/29/2022)

THE NEW YORK TIMES: “Simply put, a recession is when the economy stops growing and starts shrinking. Some say that happens when the value of goods and services produced in a country, known as the gross domestic product, declines for two consecutive quarters, or half a year.” (“What Is A Recession, And When Is The Next One Going To Begin?,” The New York Times, 6/24/2022)

THE WALL STREET JOURNAL: “A recession is widely understood as two consecutive quarters of negative economic growth, though the National Bureau of Economic Research, which is responsible for marking expansions and downturns, says a recession ‘involves a significant decline in economic activity that is spread across the economy and lasts more than a few months.’” (“New York Fed Model Sees High Probability Of Hard Landing For Economy,” The Wall Street Journal, 6/17/2022)

BLOOMBERG ECONOMICS: “Bloomberg Economics’ new nowcast model flags that US GDP may have contracted in the second quarter. Coming hard on the heels of the first-quarter GDP drop, that would fit the popular definition of a recession as two consecutive quarters of negative growth.” (“US Nowcast Model Says Recession Might Already Be Here,” Bloomberg, 7/13/2022)

AXIOS: “The colloquial definition is that two consecutive quarters of contraction equals a recession. It is often useful as a rule of thumb in international comparisons.” (“White House: Even If GDP Contracted, It’s Not A Recession,” Axios, 7/21/2022)

Even Biden’s Chair Of The Council Of Economic Advisers Has Said ‘Typically, Economists Date A Recession As Being At Least Two Quarters Of Negative Growth, And Other Factors’

CECILIA ROUSE, Chair Of White House Council Of Economic Advisers: “Typically, economists date a recession as being at least two quarters of negative growth, and other factors, which we have not seen at all. So we are not expecting that we’re already in a recession.” (CNN’s “New Day,” 5/10/2022)

Liberal Economist Larry Summers, Who Correctly Predicted Inflation, Says ‘There Is A Very High Likelihood Of Recession When We’ve Been In This Kind Of Situation Before. Recession Has Essentially Always Followed When Inflation Has Been High And Unemployment Has Been Low’

LARRY SUMMERS: “I think there is a very high likelihood of recession when we’ve been in this kind of situation before. Recession has essentially always followed when inflation has been high and unemployment has been low. Soft landings represent a kind of triumph of hope over experience. I think we’re very unlikely to see one.” (CNN, 7/24/2022)

And ‘Job Growth Is Slowing [While] Unemployment Claims Are Ticking Up’

“The labor market, until now a pillar of economic resilience, is showing cracks. Job growth is slowing, unemployment claims are ticking up and several big companies, including Apple and Meta, are putting hiring plans on hold. There are signs that more firms are slashing jobs in industries as varied as tech, advertising, health care, finance and law…. ‘What had been universally positive labor market news is certainly less so now,’ said Liz Ann Sonders, managing director and chief investment strategist at Charles Schwab. ‘The anecdotes are starting to stack up of companies laying off workers or freezing hiring or limiting job postings.’” (“The Job Market Is Beginning To Show Cracks,” The Washington Post, 7/22/2022)

“Convenience store chain 7-Eleven laid off 880 corporate workers in Texas and Ohio, following its purchase of a rival chain, a company spokesperson said in an email. Ford is planning to cut 8,000 positions in the coming weeks, Bloomberg News reported. Meanwhile, electric carmaker Rivian is cutting 700 positions, delivery start-up Gopuff is laying off 1,500, and mortgage lender LoanDepot is slashing 4,800 jobs this year, according to reports…. The number of tech firms and start-ups laying off workers has picked up in recent weeks. Netflix, Tesla and Coinbase have all announced job cuts or hiring freezes. Vimeo, the online video platform and onetime tech darling, announced this week it was laying off 6 percent of its staff.” (“The Job Market Is Beginning To Show Cracks,” The Washington Post, 7/22/2022)

“The number of active job postings across multiple online platforms has declined nationwide for five straight weeks, according to an analysis by Julia Pollak, a labor economist at ZipRecruiter. Meanwhile, first-time filings for unemployment benefits rose by 7,000 last week and are up 51 percent from mid-March …” (“The Job Market Is Beginning To Show Cracks,” The Washington Post, 7/22/2022)

‘Wall Street’s Most-Talked-About Recession Indicator Is Sounding Its Loudest Alarm In Two Decades’

“Wall Street’s most-talked-about recession indicator is sounding its loudest alarm in two decades, intensifying concerns among investors that the U.S. economy is heading toward a slowdown. That indicator is called the yield curve, and it’s a way of showing how interest rates on various U.S. government bonds compare, notably three-month bills, and two-year and 10-year Treasury notes. Usually, bond investors expect to be paid more for locking up their money for a long stretch, so interest rates on short-term bonds are lower than those on longer-term ones. Plotted out on a chart, the various yields for bonds create an upward sloping line — the curve. But every once in a while, short-term rates rise above long-term ones. That negative relationship contorts the curve into what’s called an inversion, and signals that the normal situation in the world’s biggest government bond market has been upended. An inversion has preceded every U.S. recession for the past half century, so it’s seen as a harbinger of economic doom. And it’s happening now.” (“A Recession Alarm Is Ringing on Wall Street,” The New York Times, 7/21/2022)

“What sets the yield curve apart is its predictive power, and the recession signal it is sending right now is stronger than it has been since late 2000, when the bubble in technology stocks had begun to burst and a recession was just a few months away. That recession hit in March 2001 and lasted about eight months…. The yield curve also foretold the global financial crisis that began in December 2007, initially inverting in late 2005 and staying that way until mid-2007. That track record is why investors across the financial markets have taken notice now that the yield curve has inverted again. ‘The yield curve is not the gospel, but I think to ignore it is at your own peril,’ said Greg Peters, co-chief investment officer at the asset manager PGIM Fixed Income.” (“A Recession Alarm Is Ringing on Wall Street,” The New York Times, 7/21/2022)

Nearly Two-Thirds Of Americans, Including 56% Of Democrats, Think ‘The Economy Is Currently In A Recession’

“As some economists warn of a looming recession, most Americans think the country is already there. The poll finds 64% of Americans feel the economy is currently in a recession, higher than the shares who said so just ahead of the Great Recession (46% felt that way in October 2007) and a recession that began in 2001 (44% said the country was already in a recession in February ‘01). Majorities across parties say the country is already in a recession, including 56% of Democrats, 63% of independents and 76% of Republicans.” (“CNN Poll: Most Americans Are Discontented With Biden, The Economy And The State Of The Country,” CNN, 7/18/2022)

Meanwhile, ‘Inflation Is Crippling Rural America’ And Elderly Americans On Fixed Incomes Are Struggling To Make Ends Meet

“Inflation is crippling rural America and driving some people to consider moving closer to cities in an effort to ease the financial stress, according to the latest analysis from one expert. Iowa State University professor Dave Peters has been studying the effect of inflation on people in rural communities as part of the school’s Small Town Project. He found that this year alone, expenses for rural Americans had increased by 9.2%, but their earnings only increased by 2.6%. And Peters has pinpointed where it’s hurting most. ‘Mainly, fuel prices, particularly among the farmer and agricultural community,’ he said. ‘They really are worried about the price of gas and diesel.’” (“Inflation Is Crippling Rural America And May Even Drive People To The Cities,” NPR, 7/25/2022)

One Analysis Found Gasoline ‘Costs Rural Households $2,500 More A Year’ Than Two Years Ago And Fuel Oil Costs Around $1,000 More

“Inflation soared to a 40-year high in June, and is affecting all American households. But Peters said travel was one of the main reasons it was hitting harder in rural areas. ‘Rural people have to drive long distances for work, for school, for health care, just to get the daily necessities of life like groceries ... there is no public transportation,’ he said. His analysis found it costs rural households $2,500 more a year to pay for gasoline than it did two years ago. At the same time, prices are also rising for health insurance, veterinarian care, and fuel to heat homes. ‘Most rural homes have to buy tanks of liquefied petroleum or liquefied propane, or they have to get fuel oil,’ Peters said. ‘And those have really risen in costs as well; that’s, I think, something like $1,000 more.’” (“Inflation Is Crippling Rural America And May Even Drive People To The Cities,” NPR, 7/25/2022)

“Peters warned that if prices stayed too high for too long, it could start a dangerous cycle for some rural Americans. It begins with people dipping into their savings, which Peters said was already happening. Next, they will be forced to use their discretionary money on essential goods; and after that they will go into debt on credit cards. But what really worries Peters is the idea that some in rural America will then start taking out home equity lines of credit because the value of their homes has increased, especially in the Midwest region. But he warned this strategy could backfire. ‘That’s particularly dangerous if home prices fall back down and then they’re left with a mortgage that the value of their home doesn’t cover,’ he said.” (“Inflation Is Crippling Rural America And May Even Drive People To The Cities,” NPR, 7/25/2022)

One Recent Report Found Around Half Of Elderly Americans Living Alone Can’t Afford Essential Expenses

“Rising inflation coupled with higher costs of living have put strains on many Americans’ pursestrings. But estimates from the University of Massachusetts-Boston’s Elder Index detail the toll of the cost of aging on the nation’s elderly residents. Over half of older women who live alone are classified as poor under federal poverty standards or have insufficient incomes to pay for essential expenses, while 45 percent of men share the same financial situations. The index takes several factors into account including cost of health care, food, housing, and transportation and can be adjusted based on seniors’ health status. In 2020, data from the index showed over 2 million older couples were considered financially insecure based on their yearly incomes.” (“Around Half Of Older Americans Can’t Afford Essential Expenses: Report,” The Hill, 7/25/2022)