A recession by any other name smells just as stinky.
When the stock market wreaks havoc on your retirement savings and inflation starts cutting into your paycheck, you are feeling the pinch of recession. When persistently high gas prices make you reluctant to travel and you switch to drumsticks and thighs instead of chicken wings and breasts because they’re cheaper, you’re feeling the pinch of recession.
But that’s not the true standard for a recession. The standard, in short, is that two consecutive quarters of negative growth make for a recession.
It is widely expected based on available data that the report from the Bureau of Economic Analysis on Thursday will show that the country’s real gross domestic product shrank again in the second quarter of 2022. That will be the second quarter in a row of negative growth, which means it will come with the additional determination that the United States has been in a recession since January.
This prospect has the Biden administration in a comical sort of falling-all-over-themselves panic. That’s because President Joe Biden’s defenders are now attempting to massage the definition of “recession” so that the current economic contraction no longer qualifies.
The last 10 periods in which there were two consecutive quarters of economic contraction came during the recessions of 1949, 1953, 1958, 1970, 1974, 1982, 1991, 2001, 2008, and 2020. Some of these recessions were short and mild, and others were brutal, but what they all have in common is that they were all recessions — every single one. That’s what you call it when there are two quarters in a row of negative growth. This was even true of the 2020 COVID recession, whose sharp contraction straddled two quarters but lasted less than three calendar months.
So if there is a second quarter of negative GDP growth, and government economists somehow choose not to acknowledge a recession, this will be the first time that has ever happened in U.S. history.
Still, the blog for the White House Council of Economic Advisers vigorously and in very complicated terms attempts to argue that this time, it’s different. Other Biden administration officials are making the case on television. “In terms of the technical definition, it’s not a recession,” Brian Deese, director of Biden’s National Economic Council, said in a CNN interview on July 25. “In practical terms, what matters to the American people is whether they have a little economic breathing room, they have more job opportunities, they have wages that are going up.”
It is odd that Deese would take the risk of saying such a thing since real wages have been falling uninterruptedly ever since COVID hit.
In any case, the White House is making a strategic error here. Its semantic obsession makes it look silly and desperate when there’s no good reason for it. It should really be using its energy to do something useful.
Voters already clearly feel lousy about the U.S. economy. Sixty-six percent disapprove of how Biden is handling it, according to the latest Quinnipiac poll, and that result is consistent with six out of the last seven polls to ask the question. What’s more, 67% believe that things are worse now than they were a year ago, which is also consistent with the idea that the economy has entered a recessionary period.
So no, you don’t need to invoke the R-word to make people angry — they’re plenty angry already. If you’re Biden, it’s surely smarter to get the recession announcement out of the way now and pray for an announcement of recovery in three months.
Speaking of which, just imagine how much worse this whole thing would get for Biden’s White House and for Democrats if they successfully gamed the refs at the National Bureau of Economic Research and received a statement that there is no recession, only to have one announced in late October, days before the election.
Biden is desperate to avoid the “recession” label because he is still trying to get Democrats in Congress to raise taxes, and they won’t want to be called out for raising taxes during a recession.
But in the end, semantics are not going to save Biden, Democrats, or anyone else. Just as you can’t talk down a good economy, you can’t talk up a bad one.
