On July 28, the U.S. Bureau of Economic Analysis (USBoEA) will publish the GDP data for the second quarter. There are all indications that this report is disastrous. As of July 19, growth was estimated to be around -1.6% according to the current trackers.
This means the United States is already in a recession according to traditional definitions. US GDP for the first quarter was -1.6%, which combined with the drop in second quarter growth gives the US two quarters straight of negative economic growth. Technically, this is a sign of recession. Additionally, the yield curve for bonds has inverted recently, which has occurred before any other recession in modern times.
What’s the White House to do with that devastating economic news dropping on their watch and as a result of their policies? They are apparently going to define what it is to be in recession, in an act that would make George Orwell blush.
Bracing to Impact: Even though Thursday’s GDP report shows that the quarter ended in negative growth, the Biden administration won’t use 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
I wonder if the “economists” cited by the White House in that statement are the same “economists” who said inflation would be temporary and transitory? That would make sense given how ridiculous it is to suggest that two straight quarters of negative growth combined with an inflationary boom and a yield curve inversion don’t qualify as a recession. It is absurd to be so technical when it comes to analyzing the US economy. Instead, a group of economic advisers can simply redefine what the terms mean and declare that negative growth actually indicates strength.
Imagine a situation where the Republican government tried to manipulate the game in this way. What would you expect the reaction of the media? I’m pretty sure we’d be getting a deluge of articles asserting the dishonesty in not calling two straight quarters of negative growth a recession.
We will keep hearing about Joe Biden’s low unemployment because it is Joe Biden that we are referring to. Even then, we only have low employment because of a labor shortage partly driven by the current supply chain crisis, so even Biden’s big “win” economically is a product of him losing everywhere else.
The good news is that no one is going to buy this sleight of hand because as I’ve said before, you can’t lie to people about what’s in their bank accounts. Because they feel the hardship, people can recognize it. That’s what makes the economy such a preeminent issue in politics. It would be better for The White House to accept its lump and not mislead Americans. This only reinforces the false perception that the administration doesn’t understand and is incapable of acknowledging hardships for those they claim to be serving. That’s not a winning strategy.