The White House Council of Economic Advisers said July 21 that even if advance estimates of the country’s gross domestic product on Friday were negative, it was still “unlikely” to be a signal that the country is in a recession.
Recessions refer to two consecutive quarters of negative economic growth.
In a blog post, the Council of Economic Advisers said that two consecutive quarters of lower GDP does not mean the country is in a recession.
“What is a recession? While some see two consecutive quarters of decline in real GDP constitute a recession, that is neither the official definition nor the way economists assess the state of the business cycle,” the blog post read.
Treasury department. Janet Yellen acknowledges economic ‘slowdown’ but removes recession fears
Citing figures from the National Bureau of Economic Research, the publication states that “recession index variables” have “demonstrated strong growth in the US economy since the beginning of the pandemic, and continued to expand during the first half of this year.”
Even if the Bureau of Economic Analysis’s advance estimate of second-quarter GDP shows a negative number, the blog post indicates that the country is unlikely to be in a recession.
“Based on this data, it is unlikely that the decline in GDP in the first quarter of this year – even if followed by another decline in GDP in the second – indicates a recession,” according to the publication.
Meanwhile, inflation rose to a 40-year high in June, reaching 9.1%.
On NBC News’ “Meet the Press,” Treasury Secretary Janet Yellen said the economy is not in a recession but is in a “transition period” where “growth is slowing.”
Since President Biden called inflation ‘transient’, the US has seen a rise in costs in 13 months.
“The job market right now is very strong,” Yellen said. “This is not an economy in recession, but we are in a transition period where growth is slowing. This is necessary and appropriate, and we need to grow at a steady and sustainable pace. So, there is a slowdown, companies can see that and that is appropriate, given that people have jobs now, and we have Strong job market.
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Republican National Committee spokesman Will O’Grady told FOX Business that “redefining” what a recession is not going to fix some legislative actions Democrats have taken.
“Joe Biden turned the recovery into a potential recession. Redefining the word won’t fix the fact that Democrats wasted $1.9 trillion, driving up costs to Americans. It also underscores how disconnected Biden and Democrats are from the pain families feel,” O’Grady said.