Christine Romans, CNN chief business correspondent, joined both Day of the New And CNN Newsroom The new GDP numbers showed that the U.S. had entered recession. It is important to ignore this definition and remember that people sometimes feel like they’re in a recession because of income inequality.
The initial reaction to the news Day of the NewJohn Berman asked Romans to clarify the meaning of these numbers. Romans declared, “The U.S. economy last year, the strongest since the Reagan Administration, and now U.S. economic growth is slowing here. As you all know, two consecutive quarters of decline is the start of a recession. This is just one example. 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.”
Romans appeared less than 30 minutes later. CNN Newsroom Jim Sciutto as host and Bianna Gorodryga guest host, were she brought the spinning 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.”
Romans and CNN’s other employees are unlikely to offer this kind of nuance to the Republican President in the exact same circumstance.
Day of the NewSponsored by Liberty Mutual And CNN Newsroom This was sponsored by Dell.
This transcript is for the shows of July 28, 2008.
CNN Day of the New
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. Christine Romans is chief business correspondent. Let’s hear their thoughts.
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.
As you can see, it was a wild 2021. It was America’s strongest year since Reagan. But, now, U.S. Economic growth is slowing. As you all know, two consecutive quarters of decline is the start of a recession. That’s not all. It is important to examine all economic data.
The labor market is still quite strong. That number was just released when we look at claims for jobless benefits. This is, obviously, an indication of the number of people who applied for unemployment benefits for their first time. This number is 256,000 This is a slight decrease from the previous week’s revised higher number. These numbers are possible trends that may be rising, though they come from very low bases.
Also, pay attention to these numbers in the labor market. Many people believe that the strong labor market is what is keeping America’s economy from being in recession.
BRIANNA KEILAR: Why — okay, and — and is that the only number? Are there any other numbers you are looking at which point in the opposite direction? It’s this kind of push/pull that we’re seeing.
ROMANS: Oh, absolutely. While the consumer remains in a good place, we can see some cracks. 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 PoppyHarlow and Jim Sciutto
7/28/2022
9:00 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: Yes.
SCIUTTO: — because there’s a lot of numbers—
ROMANTS: Yes.
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 : Yes.
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 it’s not a technical recession. 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. It wasn’t one quarter. That was a two-month recession, two or three-month recession because of the COVID crisis. Each one of these is unique. 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.
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