This coming July 28th, the U.S. Bureau of Economic Analysis will release the second quarter GDP numbers, and all available signs point to a disastrous report. Current trackers have growth sitting at around -1.6 percent as of July 19th.
That means that according to the most traditional definition of a recession, the United States has already entered into one. US first quarter GDP came in at -1.6 percent, which combines with the second quarter drop to give the economy two straight quarters of negative growth. That is the technical definition of a recession. Further, the bond yield curve has recently inverted, something that has preceded every other recession in modern history.
What’s the White House to do with that devastating economic news dropping on their watch and as a result of their policies? Apparently, in a move that would make George Orwell cringe, they are going to simply redefine what it means to be in a recession.
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. After all, why be technical about something as important as analyzing the US economy when you can just have a panel of faceless economic advisors redefine the terms and proclaim that negative growth is actually a sign of strength.
Try to imagine a scenario where a Republican administration tried to rig the game like this. How do you think the press would respond? 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.
Instead, because this is Joe Biden we are talking about, we will continue to get tortured pieces about how low unemployment is the only indicator that matters. 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. People recognize economic hardship when it occurs because they personally feel it. That’s what makes the economy such a preeminent issue in politics. The White House would do better to take its lump instead of misleading the American people. By doing so, they are only feeding into the accurate perception that the administration is both clueless and unable to even acknowledge the hardships of those it ostensibly serves. That’s not a winning strategy.