On July 21 the White House published a document on its official blog attempting to redefine an economic recession, to exclude the widely accepted criteria of two consecutive quarters of GDP contraction. This vague new definition came at an extremely convenient time for President Biden’s economic advisors, considering all signs point to the country having just experienced its second quarter in a row of negative growth (pending a report coming this Thursday).
But for years, journalists and experts alike have argued in favor of the definition which the Biden administration has just tried to undo: that at least two straight quarters of negative GDP growth means the country is in a recession. See the video below for proof:
Presumably then, these journalists take issue with the White House’s July 21 statement, which read in part:
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 last sentence in particular was in direct conflict with what MSNBC political analyst Richard Stengel had to say in 2019:
“What is a recession? A recession is two consecutive quarters of contracting economy... Economists don’t just put a finger in the wind and decide, ‘maybe it’s going to be a recession, maybe it’s not.’ They’re looking at data.”
It would be interesting to hear what CNN’s John Harwood thinks about this ploy by the White House, because during the 2020 COVID-19 lockdowns he argued that even one quarter of severe GDP decline might be enough to qualify: “Even if we don’t have two consecutive quarters of negative growth, we might have one quarter of [negative] growth so deep that it’s classified as a recession.”
And it’s not as though everyone’s opinion changed the moment Biden came into office either. On July 13 of this year, CNBC economics editor Jeff Cox restated the same point: “A tracker for the Atlanta Fed indicates a minus 1.2 percent growth for the second quarter. That would put us into what we call a technical recession – I mean, the most common definition of a recession: two consecutive quarters of negative growth.”
Will these journalists inflict yet another wound to their own credibility and adopt the Biden White House’s nakedly political new definition? We’ll be watching when the official numbers come out on Thursday.