by Mitch Kokai
Senior Political Analyst, John Locke Foundation
A recession by any other name smells just as stinky.
When the stock market wreaks havoc on your retirement savings and inflation starts cutting into your paycheck, you are feeling the pinch of recession. When persistently high gas prices make you reluctant to travel and you switch to drumsticks and thighs instead of chicken wings and breasts because they’re cheaper, you’re feeling the pinch of recession.
But that’s not the true standard for a recession. The standard, in short, is that two consecutive quarters of negative growth make for a recession.
It is widely expected based on available data that the report from the Bureau of Economic Analysis on Thursday will show that the country’s real gross domestic product shrank again in the second quarter of 2022. That will be the second quarter in a row of negative growth, which means it will come with the additional determination that the United States has been in a recession since January.
This prospect has the Biden administration in a comical sort of falling-all-over-themselves panic. That’s because President Joe Biden’s defenders are now attempting to massage the definition of “recession” so that the current economic contraction no longer qualifies.
The last 10 periods in which there were two consecutive quarters of economic contraction came during the recessions of 1949, 1953, 1958, 1970, 1974, 1982, 1991, 2001, 2008, and 2020. Some of these recessions were short and mild, and others were brutal, but what they all have in common is that they were all recessions — every single one. That’s what you call it when there are two quarters in a row of negative growth. This was even true of the 2020 COVID recession, whose sharp contraction straddled two quarters but lasted less than three calendar months.
So if there is a second quarter of negative GDP growth, and government economists somehow choose not to acknowledge a recession, this will be the first time that has ever happened in U.S. history.