White House tries to get ahead of negative economic news
The Biden administration is trying to get ahead of what economists expect to be another negative reading for Gross Domestic Product on July 28.
This comes as the Federal Reserve on Wednesday moved to raise interest rates by 0.75%, the second big rate hike in two months.
One common definition of a recession is two consecutive quarters of negative GDP growth. GDP grew by 6.9% in the fourth quarter of 2021 before steeply falling in the first quarter of 2022, clocking in at a negative 1.6%. Economists are predicting that tomorrow’s GDP reading could also be negative, possibly in the red by 1.5% or more.
Economists put much of the blame for stalled economic activity to the impact of surging inflation, in addition to the expiration of government stimulus packages that had pumped unprecedented amounts of cash into the economy.
Even so, the White House has been downplaying the bad economic news and attempting to rewrite the traditional definition of a recession.
“Two negative quarters of GDP growth is not the technical definition of recession. It’s not the definition that economists have traditionally relied on,” said Brian Deese, White House Director of the National Economic Council.
Biden senior advisor Gene Sperling echoed those sentiments on Fox News, saying, “I don’t think there’s any view that would interpret this second quarter of these six months as being recessionary.”
Treasurer Secretary Janet Yellen also downplayed recessionary fears during an appearance on NBC’s Meet the Press: “There is an organization called the National Bureau of Economic Research that looks at a broad range of data in deciding whether or not there is a recession. And most of the data that they look at right now continues to be strong. I would be amazed if they would declare this period to be a recession, even if it happens to have two quarters of negative growth.”
Republicans are firing back at the White House’s attempt to rebrand the traditional definition of a recession. In a statement released July 26, the U.S. House GOP said, “Instead of offering Americans solutions to 40-year inflation that’s crushing American families and small businesses, President Biden’s solution is to deny responsibility and say it isn’t happening.”
Polling indicates that Americans are not buying into the Biden administration’s spin. A Civitas poll from June found that 77% of North Carolinians believe the U.S. is already in a recession. The same poll reported that 72% say the country is on the wrong track.
This isn’t the first time in recent years the U.S. has entered recessionary territory. GDP contracted severely in the first two quarters of 2020 due to economic shutdowns from the COVID-19 pandemic — negative 5.1% in the first quarter and negative 31.2% in the second quarter. GDP then rebounded to 33.8% in the third quarter of 2020.
This story was updated to include the Federal Reserves interest rate increase on Wednesday July 27, 2022.