Before the announcement of second quarter GDP numbers in a press release scheduled for Thursday, the Biden administration downplayed worries about the status of the economy and attempted to redefine what a recession is. According to Axios, economists commonly use two consecutive quarters of negative GDP growth as a “rule of thumb” to determine if an economy is in a recession. However, President Biden’s economic team said in a blog post that even though the economy contracted by 1.4% in the first quarter, it is “unlikely” that the second quarter’s negative GDP numbers constitute a rescission.
Bracing for impact: Even if Thursday's GDP report shows a second consecutive quarter of negative growth, you won't hear the Biden admin using the R-word.
The Council of Economic Advisers is redefining what a recession is…🤔https://t.co/HHBYJKqP5V pic.twitter.com/gecR93vPPj
— Jacqui Heinrich (@JacquiHeinrich) July 24, 2022
The National Bureau of Economic Research defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.” Google defines the term as “a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.”
E.J. Antoni, a research fellow for regional economics at the Heritage Foundation, said that since the end of World War II, a recession has been declared when the economy experiences negative growth for two consecutive quarters. The Biden administration argues that two quarters of dropping output should not be used to assess inflation because industrial production, employment, and expenditure have all grown this year.
In June, data from the Job Creators Network revealed that economic sentiment from small business owners fell to its lowest point since they began tracking the statistic. Additionally, businesses of all sizes said that they were experiencing a slowdown in business, inflation, and profit declines. Some larger companies have also started downsizing their workforce, all of which point to a recession.
