". . . and having done all . . . stand firm." Eph. 6:13


Biden Administration: ‘Recession’ Means Whatever We Say It Means

July 26, 2022

“We’re not going to be in a recession, in my view,” President Joe Biden told reporters on Monday, in response to a question about his expectations for the 2nd quarter of 2022 GDP numbers scheduled for release on Thursday. The Atlanta Fed has predicted a 1.6% decline in Gross Domestic Product (GDP) for the second quarter, after the Bureau of Economic Analysis also estimated a 1.6% decline in GDP for the first quarter of the year.

Reporters and other analysts often use the “rule of thumb” that “two consecutive quarters of contraction equals a recession,” which Axios calls a “colloquial definition.” Based on that definition, many reporters are prepared to declare an unofficial recession on Thursday, if the GDP numbers are as poor as expected.

Any such declaration would be unofficial, because the task of officially declaring a recession falls to the National Bureau of Economic Research’s (NBER) Business Cycle Dating Committee. Their definition of inflation is slightly more complex. They explain, “a recession involves a significant decline in economic activity that is spread across the economy and lasts more than a few months.”

In coming to a determination, the committee considers a variety of factors. “There is no fixed rule about what measures contribute information to the process or how they are weighted in our decisions,” they say. Hence why non-experts use “two consecutive quarters of contraction” as a quick approximation for recession.

Nevertheless, the White House has spent the past week arguing that Thursday’s release of the 2nd quarter GDP numbers can’t prove the existence of a recession because the non-technical definition is unofficial. In a July 21 blog, the White House Council of Economic Advisors wrote:

While some maintain that two consecutive quarters of falling real GDP constitute a recession, that is neither the official definition nor the way economists evaluate the state of the business cycle. Instead, both official determinations of recessions and economists’ assessment of economic activity are based on a holistic look at the data — including the labor market, consumer and business spending, industrial production, and incomes. Based on these data, it is unlikely that the decline in GDP in the first quarter of this year — even if followed by another GDP decline in the second quarter — indicates a recession.

The surprising contention — that official government statistics are effectively meaningless — certainly caught reporters’ attention; they began asking about it at every opportunity. White House Press Secretary Karine Jean-Pierre had to explain last Thursday, “Right now, we don’t see a recession. Right now, that is — we’re not in a recession right now. Right now, we’re in a transition where we are going to go into a place of stable and steady growth, and that’s going to be our focus.” Her focus on “right now” recalled her earlier attempt to dismiss June’s damaging inflation report as “out-of-date” — thus revealing the administration’s pattern. The Biden administration discredits official statistics when they show an unflattering reality.

On Friday, Jean-Pierre was asked whether the White House was trying to change the common definition of recession and responded, “The strength of our labor market along with the other economic factors is not what we generally see in a recession, or even a pre-recession, because we’re seeing the strength of the economy and the labor market. … We’ve always talked about the strength of our economy, we’ve always talked about how historic it’s been, and we’ve always talked about the transitioning.”

The White House proved so elusive that even CNN grilled Jean-Pierre on Monday, “What is exactly the White House’s definition of a recession?” She answered, “I’m just going to leave it to the NBER. … We’re just not going to define it.” Maybe “recession” means the same thing as “woman.” Another reporter asked why President Biden was confident the economy is not in recession. “It’s not our definition,” came her reply. White House Director of the National Economic Council Brian Deese also argued Monday on CNN, “in terms of the technical definition, it’s not a recession.”

They’re not fooling anyone. The forceful insistence of Biden’s team for the “technical definition” employed by the NBER indicates they fear Thursday’s report will contain as much bad news as everyone expects. The White House favors the technical definition because it requires an economic downturn to be “spread across the economy,” which means they can claim to deny the existence of a recession by pointing to any one bright spot. Thus, they have made much of the fact that unemployment remains at historically low levels — which, in all fairness, is unusual during a recession.

But that doesn’t mean employment is healthy or the labor market is strong. According to a recent report from the U.S. Chamber of Commerce, there are 3.25 million missing workers, compared to the Labor Force Participation Rate from February 2020. They show we have the opposite problem, a labor shortage. “Right now, the latest data shows that we have over 11 million job openings in the U.S. — but only six million unemployed workers.”

There’s a reason most non-experts use the non-“technical” definition of a recession: it’s usually correct. Only the rarest of circumstances could cause the total economy to contract for two consecutive quarters without that contraction being spread across it — administration smoke screens notwithstanding. The technical definition simply allows economic and statistical experts — who, unlike the Biden administration, don’t have a political stake in the outcome — some flexibility in declaring a recession. For instance, they declared the short period of February-April 2020 to be a recession due to the severity of the COVID-lockdown-related contraction. In December 2008, they declared that the economy had peaked in December 2007.

The NBER’s business cycle explainer makes clear there are only two phases for an economy: expansion and contraction. Expansion is the norm. During an expansion, economic activity gradually increases as people start and grow their businesses. During short periods of contraction, which are also called recessions, insolvent businesses fail, and workers in unprofitable positions are laid off. The Biden administration can say whatever it wants about the economy, but there is no way it can spin two consecutive quarters of falling GDP as an expansion of the economy. And so, consumer confidence continues to plummet.

That the Biden administration would even try to discredit the official statistics and put a rose-colored tinge on a faltering economic outlook betrays their poisonous worldview. For them, there is no such thing as absolute truth. There isn’t even such a thing as constant definitions. Political rhetoric is simply a tool to advance their own agenda, and they believe that all parties abuse language in the same, cynical way.

“Recession” isn’t the most important word redefined by the Biden administration and others on the Left. Supreme Court Justice Ketanji Brown Jackson refused to define “woman” during her confirmation hearing. Merriam-Webster redefined “female” as “having a gender identity that is the opposite of male.” The Department of Health and Human Services proposed a rule that would redefine “sex” to mean something totally different. The list goes on: The Equality Act would codify inequality, The Respect for Marriage Act would disrespect marriage, etc.

Is there any word the Left won’t redefine? Is there any truth they won’t deny? God once judged the world by confusing their language; now men are judging themselves by confusing their own language. Sharing a common language and understanding of what words mean is one of the most fundamental attributes that holds society together. The Left seems to believe that society isn’t worth holding together, if it won’t conform to their utopian schemes. God help us.

Joshua Arnold is a staff writer at The Washington Stand.