The Biden administration is pre-empting expected news that the economy shrank for the second quarter in a row by redefining what constitutes a recession. 

They must think the American people are not smart enough to understand the economy just as they tried to gaslight us to believe that the inflation pain we feel at the grocery store isn’t real. 

How can anyone believe the same Biden experts who claimed inflation was “temporary” over a year ago?

The numbers

This week, data on the gross domestic product (GDP) will be released and is expected to bring terrible news of a shrinking economy. If so, that would be a recession as has historically been understood.

Recessions are technically defined as two consecutive quarters of negative economic growth. The National Bureau of Economic Research (NBER) says they are characterized by high unemployment, low or negative GDP growth, falling income, and slowing retail sales. 

The economy decreased at an annual rate of 1.6 percent in the first quarter of 2022. If the economy shrank in Q2, we would be in a recession–something that the White House fears.

Last year, the economy grew at a remarkable pace throughout most of the year as the economy was rebounding with the rapid distribution of vaccines.

The Biden Spin

The White House put out a blog post challenging the notion that the U.S. economy is in recession: 

What is a recession? 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.

Economic surrogates from the Biden administration fanned out across cable and network news over the weekend to tamper recession fears ahead of this week’s GDP numbers being released.

“We’ve got a very strong labor market… This is not an economy that’s in recession.”

Secretary of Commerce Janet Raimondo thinks inflation has peaked.

Don’t trust these experts

Do we trust Yellen who famously told us that inflation was “transitory?” In June 2021, when she said that, inflation was 5.4%. Today, it’s 9.1%

The White House and administration are pointing to strong job growth as evidence that the economy is strong, but employment trails downturns in the economy, it doesn’t precede it. It takes time for employers to lay off workers even after the economy has slowed down unless there’s a sudden shock like a pandemic.

Even if we consider employment, there have been recent layoffs and slowdowns in hiring across sectors, but especially the tech sector, and rising job claims. 

Households are spending down their savings and racking back up credit debt again just to stay atop the rising inflation on basic household goods.

The administration needs to paint a rosy picture to quell fears among Americans that may cause them to clamp their wallets shut and hunker down for a recession. 

Bottom Line

No one wants a recession. The job losses and business failings are painful. But as I’ve written, economic growth and contraction are a part of the business cycle, no matter what President Biden says. Don’t try to fool Americans otherwise.