White House downplays recession fears ahead of next GDP report

While there is no hard and fast rule governing what defines a recession in the United States, it is commonly understood to be two consecutive quarters of GDP contraction. But a small group of economists from 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 spreads through the economy and lasts more than a few months. .”

National Economic Council Director Brian Deese argued Monday that while this week’s report from the Commerce Department shows a second straight negative quarter of gross domestic product, that doesn’t mean the United States is in a recession. Using an argument the White House used regarding an inflation report earlier this month, Deese said the second-quarter data — which reflects the April-June period — will be “inherently backward-looking,” and highlighted the jobs created in this time range.

Other economic advisers to Deese and Biden try to use that spongy definition to say the economy is resilient, even though last week’s CNN poll showed the public’s view of the economy the worst since 2011.

“Certainly in terms of the technical definition, it’s not a recession. The technical definition looks at a much wider range of data points. But in practical terms, what matters to Americans is whether they have a little economic relief, if they have more job opportunities, their wages go up – that’s Joe Biden’s goal since taking office,” Deese said.

“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 that resilience,” Deese said. “But that’s no reason to be complacent. 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 reduce costs for American families, including lowering prescription drug prices and bolstering computer chip manufacturing in the United States, which he said would help reduce automobile costs.

“These are very uncertain times,” Deese said. “And when you go to park at the gas station or at the grocery store and you see these high prices, not only do they create difficulty, but they create uncertainty as to what things are going to be like. coming.”

The United States expects a number of key economic indicator reports this week outside of the second-quarter GDP numbers due Thursday, including Tuesday’s consumer confidence survey and the index of personal consumption expenditure on Friday. 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 said on Sunday the economy was in “transition” and there was a “slowdown”.

“It’s not an economy in recession, but we’re in a transition period where growth is slowing,” she told NBC’s “Meet the Press.”