President Joe Biden’s advisers are downplaying recession fears ahead of a highly anticipated report that could show the economy shrinking for a second consecutive quarter.
While there is no steadfast rule governing what defines a recession in the US, it is commonly understood to be two consecutive quarters of GDP shrinking. But a small group of economists on the Business Cycle Dating Committee officially define when the US economy is in a recession, and they define a recession as involving “a significant decline in economic activity that is spread across the economy and lasts more than a few months.”
Director of the National Economic Council Brian Deese argued Monday that if this week’s report from the Commerce Department shows a second consecutive negative quarter of gross domestic product it does not mean the US is in a recession. Using an argument that the White House used regarding an inflation report earlier this month, Deese said the second quarter data — which reflects the April through June period — will be “inherently backward-looking,” and pointed to the jobs created in that time frame.
“Never in the history of our country have we had a recession where the economy was creating jobs, period, let alone creating 400,000 jobs,” Deese told AWN’s John Berman on “New Day.”
Deese and Biden’s other economic advisers are trying to use that squishy definition to argue that the economy is resilient, even if last week’s AWN poll showed the public’s view of the economy is the worst it’s been since 2011.
“Certainly in terms of the technical definition, it’s not a recession. The technical definition considers a much broader spectrum of data points. But in practical terms what matters to American people is whether they have a little economic breathing room, they have more job opportunities, their wages are going up — that has been Joe Biden’s focus since coming into office,” Deese said.
Deese said despite the high gas and grocery prices the nation’s economy is “demonstrating resilience in the face of very significant global economic challenges.” Gas prices have dropped in recent weeks, having dropped about 55 cents over the last month, according to AAA.
“If you look at the labor market, if you look at what consumers are spending, what businesses and households are investing, you continue to see this resilience,” Deese said. “But that’s no reason for complacency. We need to act. We need to act on things like prescription drugs and things like semiconductors right now.”
He urged Congress to take immediate action to bring down costs for American families, including by lowering prescription drug prices and bolstering US computer chip manufacturing, which he noted would help bring down costs for automobiles.
“These are very uncertain times,” Deese said. “And when you go and pull up at the gas station or pull into the grocery store and see these high prices, they not only create hardship but they create uncertainty for what things are going to be like in the future.”
The US is expecting a number of key economic indicator reports this week aside from the second quarter GDP numbers coming Thursday, including Tuesday’s consumer confidence survey and Friday’s Personal Consumption Expenditure index. The Federal Reserve also meets on Wednesday to discuss interest rates.
Other top Biden administration officials continue to insist the economy is not in recession amid widespread inflation. Treasury Secretary Janet Yellen argued Sunday the economy is in “transition” and there is a “slowdown.”
“This is not an economy that’s in recession, but we’re in a period of transition in which growth is slowing,” she told NBC’s “Meet the Press.”