CNN chief business correspondent Christine Romans joined both New Day and CNN Newsroom on Thursday to discuss the new GDP numbers that showed the U.S. economy has met the definition of a recession. This definition, she argued, should be ignored and it should be remembered that some people always feel like they are in a recession due to income inequality.
Reacting to the initial news on New Day, Romans was asked by host John Berman to explain what the numbers mean. Romans declared, “The U.S. economy last year, the strongest since the Reagan Administration, and now U.S. economic growth is slowing here. Now, as you know, the beginning of a definition of a recession is two quarters in a row of a decline. But that's just the beginning. You have to look at the entire set of economic numbers out there.”
Romans argued that “we still have a pretty strong labor market,” which is why “many people say, is why the U.S. economy is not technically in a recession right now.”
Less than half an hour later, Romans was on CNN Newsroom with host Jim Sciutto and guest host Bianna Golodryga, where she took the spin to the next level.
After repeating the same arguments about the labor market, Romans blamed the situation on everyone not named Joe Biden, “Because that red hot economy with all the supply chain problems and then a war in Ukraine were causing all kinds of inflationary problems. So this is the sign of, you know, tapping on the brakes, the U.S. economy slowing down a bit.”
Golodryga followed up by wanting confirmation that this is, “not a technical recession, right? This is, sort of, a rule of thumb gauge as to how the economy is doing.”
Romans provided that confirmation and wondered what why this is so controversial, “exactly, and this has become very political. I cannot believe the semantics that have been going on in Washington these days about—about-- what a recession is.”
After acknowledging, “certainly people feel like they're in a recession,” Romans started spinning even harder, “And quite honestly, the American economy, there are some people who are always in a recession because we have such income inequality in the country.”
She concluded by again casting doubt on the standard definition, “there is not this hard and fast rule about what makes a recession. You know it when you see it” and warning of a “self-fulfilling” prophecy where “you talk yourself into a recession.”
It is very unlikely Romans or anyone else at CNN would be willing to provide this level of nuance to a Republican president in the same situation.
New Day was sponsored by Liberty Mutual, and CNN Newsroom was sponsored by Dell.
Here is a transcript for the July 28 shows:
CNN New Day
7/28/2022
8:36 AM ET
JOHN BERMAN: All right, it’s one of the numbers people have been waiting for. Just moments ago, the GDP report on second quarter earnings released — or second quarter economic growth. Chief business correspondent Christine Romans here with the numbers. What do they say?
CHRISTINE ROMANS: Alright guys, this — this is the biggest gauge of the U.S. Economy, right, and it shrank 0.9 percent in the second quarter. And that's after a shrink of 1.6 — a decline of 1.6 percent in the first quarter.
You can see it was a rip-roaring 2021. The U.S. economy last year, the strongest since the Reagan Administration, and now U.S. economic growth is slowing here. Now, as you know, the beginning of a definition of a recession is two quarters in a row of a decline. But that's just the beginning. You have to look at the entire set of economic numbers out there.
We still have a pretty strong labor market. When you look at jobless claims, that number just came in. That is, of course, a read of how many people for the very first time filed for jobless benefits. That number, 256,000. Down a little bit from last week, which is the number that was revised higher. These are numbers that could be trending up a little bit, but from a very, very low base.
So, closely watching these labor market numbers as well. It is a strong labor market, many people say, is why the U.S. economy is not technically in a recession right now.
BRIANNA KEILAR: Why — okay, and — and is that the only number? What other numbers are you looking at that are pointing in opposite directions? It’s this kind of push/pull that we're seeing.
ROMANS: Oh, absolutely. The consumer is still in a pretty good position, although we're starting to see signs of cracks there. But overall, consumer balance sheets are much better today than they were at the beginning of the last big problem we had 2008, 2009, that big — um, recession. There has been a recession since then, of course, the COVID recession, very short, only a couple of months — uh, in the beginning of — of 2020.
We won't know for sure, by the way, until the National Bureau of Economic — uh, well — these guys, the NBER put together a committee that studies all the numbers and in hindsight decides if there is a recession.
What I can tell you these numbers show us is a very strong — uh, economy last year is now slowing.
CNN Newsroom with Poppy Harlow and Jim Sciutto
7/28/2022
9:01 AM ET
JIM SCIUTTO: Let's begin though with those new GDP numbers, CNN chief business correspondent Christine Romans is here with more. So—so--, Christine, break down—
CHRISTINE ROMANS: Sure.
SCIUTTO: -- because there’s a lot of numbers—
ROMANS: Oh yeah.
SCIUTTO: -- that not just you, but economists follow, this headline number is not good.
ROMANS: So, this is GDP-- gross domestic product-- it is the largest gauge of the size of the economy and it shrank 0.9% in the second quarter. So, this is a rear- view mirror looking picture, and that's after the economy shrank 1.6% in the first quarter, that first quarter was blamed on the Omicron variant and how much was going through the economy with supply chain problems and with COVID problems.
So, you can see it shrank again, not quite as much, but that is a negative read. Two negative reads in a row is the beginning of the definition of a recession in this country. Although you really never see a recession with such strong jobs growth as the Fed chief pointed out yesterday, 2.7 million jobs created in the first half of the year.
You don't see that in a recessionary environment. What this tells you is after last year, the strongest year for the American economy since the Reagan Administration, now you have a slowdown under way in the U.S. economy. From very great gang busters growth to slowing down a little bit. Slowing down is what the Fed has been trying to engineer, right?
BIANNA GOLODRYGA: Yeah.
SCIUTTO: Right.
ROMANS: Because that red hot economy with all the supply chain problems and then a war in Ukraine were causing all kinds of inflationary problems. So this is the sign of, you know, tapping on the brakes, the U.S. economy slowing down a bit.
GOLODRYGA: But, not a technical recession, right? This is, sort of, a rule of thumb gauge as to how the economy is doing.
ROMANS: This is the—exactly, and this has become very political. I cannot believe the semantics—
SCIUTTO: Yes.
GOLODRYGA: Yeah.
SCIUTTO: Yes.
ROMANS: -- that have been going on in Washington these days about—about-- what a recession is and certainly people feel like they're in a recession. And quite honestly, the American economy, there are some people who are always in a recession because we have such income inequality in the country.
But, the National Bureau of Economic Research, it’s a bunch of economists who have a committee who sit around and look at every single number known to man, and then after the fact decide if something was a recession.
The last recession we had by the way was only a couple of months. That was in the beginning, remember, of 2020. That wasn't even one quarter. That was a two-month recession, two or three-month recession because of the COVID crisis. So, every one is different. Every one, you know, there is not this hard and fast rule about what makes a recession.
You know it when you see it—
SCIUTTO: Yeah.
ROMANS: When the economists look at every number and figure it out. But, you made a good point in the break, I think, Bianna, that at some point it becomes self-fulfilling you look at numbers like this, that people feel nervous, they pull back on their investments or spending and then you talk yourself into a recession.
GOLODRYGA: Yeah.
ROMANS: I think that’s something that some policymakers worry about.
GOLODRYGA: Yeah, we spend a lot of time talking about inflation, now our concern turns to recession. We'll see. Christine Romans, thank you so much.
