Although there is no firm rule governing what defines a recession in the United States, it is generally understood to have shrunk two consecutive quarters of GDP. But a small group of economists on the Business Cycle Dating Committee formally define when the US economy is in a recession, and define a recession as involving “a significant decline in economic activity that spreads through the economy and lasts more than a few months.”
National Economic Council Director Brian Dees argued on Monday that if this week’s report from the Commerce Department showed a second-straight negative quarter of GDP, that doesn’t mean the US is in a recession. Using the argument the White House used regarding the inflation report earlier this month, Dess said the second-quarter data – which reflects the April-June period – would be “inherently lagging,” and noted the jobs created in that time frame.
“Never in the history of our country have we experienced a recession where the economy has been providing jobs, period, let alone creating 400,000 jobs,” Des told CNN reporter John Berman on New Day.
Other economic advisers to Dess and Biden are trying to use that squishy definition to say the economy is resilient, even if a CNN poll last week showed the public’s view of the economy is the worst since 2011.
“Certainly in terms of the technical definition, this is not a stagnation. The technical definition takes into account a much wider range of data points. But in practice, what matters to the American people is whether they have a little bit of economic breathing room, they have more jobs and their paychecks are going down. Height – that’s what Joe Biden has been focusing on since taking office.”
Dess said that despite rising gas and groceries prices, the country’s economy “is showing resilience in the face of very significant global economic challenges”. Gas prices have fallen in recent weeks, having fallen by about 55 cents over the past month, according to the AAA.
“If you look at the labor market, if you look at what consumers are spending, what businesses and families are investing in, you will continue to see this resilience,” Dess said. “But that’s no cause 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 cut costs for American families, including by lowering prescription drug prices and boosting computer chip manufacturing in the United States, which he said would help lower car costs.
“These are very uncertain times,” Daisy said. “And when you go and stop at the gas station or walk into the grocery store and you see these high prices, it not only creates hardship, it creates uncertainty about what things will be like in the future.”
The US is expecting a number of major economic indicator reports this week apart from upcoming second-quarter GDP numbers Thursday, including Tuesday’s Consumer Confidence Survey and Friday’s Personal Consumption Expenditure Index. The Federal Reserve will also meet on Wednesday to discuss interest rates.
Other senior officials in the Biden administration continue to insist that the economy is not in a recession amid widespread inflation. Treasury Secretary Janet Yellen said Sunday that the economy is in a “transition” and there is a “slowdown”.
“This is not an economy in recession, but we are in a transition period where growth is slowing,” she said in an interview with NBC’s “Meet the Press.”
CNN’s Betsy Klein contributed to this report.