by Brittany Raymer
Former Digital Writer & Editor
The White House has redefined recession ahead of a GDP report expected on Thursday, which many believe will show a second consecutive quarter of negative growth. Despite the looming economic news, the Biden administration appears officially in denial.
On Meet the Press, Treasury Secretary Janet Yellin tried to convince Americans that the situation is not as dire as many fear.
“I do want to emphasize: What a recession really means is a broad-based contraction in the economy. And even if that [second-quarter-GDP-growth] number is negative, we are not in a recession now. And I would, you know, warn that we should not be characterizing that as a recession—” Yellin said.
To his credit, host Chuck Todd pushed back.
“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.”
Yellin tries to deflect by stating that it’s the National Bureau of Economic Research (NBER) that determines whether the country is in recession territory, though it’s incredibly slow in making that distinction.
The 2008 recession was only announced in December 2008, a full year after it had really started in January 2008.
It seems that people can expect much of the same from President Joe Biden and the rest of the team. Regardless of what the quarter numbers will be, the administration seems set on moving the goalpost and redefining recession in order to avoid the political fallout of a struggling economy.
As a preemptive strike, the White House has already redefined recession on its website: “What is 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—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.”
That’s not how economist Julius Shiskin defined recession in 1974, which he argued was “two consecutive quarters of declining GDP.” It’s been a standard for decades since.
But for an administration already floundering with out-of-control inflation, high energy costs and other issues right before the midterm elections, this traditional definition is not convenient and must be amended to mitigate the political fallout.
Though the NBER has the final say on whether the country is in an economic downturn, there’s real danger in the Biden administration’s denial of the situation. If the administration doesn’t recognize the country’s economic reality, how can it move forward?
The answer is that it can’t.
The economy, housing and job market in North Carolina remains fairly strong at this point, with the state being recently named by CNBC the top state in the nation for businesses. To keep that status and not let the looming recession tank the economy, North Carolina needs to continue embracing its pro-business and right to work policies. These will keep the state on the right track and lessen the impact of a recession on the state.
Do you think the country is heading towards a recession? Check out the results of the latest Civitas Poll to see what other North Carolinians think, here.