The White House Council of Economic Advisers said July 21 that even if Friday’s advance estimate of the country’s GDP is negative, it is still “unlikely” to indicate 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 says two consecutive quarters of falling GDP does not mean the country is in recession.
“What is a recession? While some argue that two consecutive quarters of real GDP decline constitutes a recession, this is neither the official definition nor how economists assess the state of the business cycle” , says the blog.
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Citing figures from the National Bureau of Economic Research, the post said their “recessionary proxies” have “shown strong growth in the U.S. economy since the start of the pandemic and continued to expand in the first half of This year”.
Even though the Bureau of Economic Analysis’s advance estimate of second-quarter GDP shows a negative figure, the blog post indicates that the country is likely not in recession.
“Based on these data, the drop in GDP in the first quarter of this year – even if followed by another drop in GDP in the second quarter – is unlikely to indicate a recession,” the post said.
Meanwhile, inflation hit a new 40-year high in June, hitting 9.1%.
On NBC News’ “Meet the Press,” Treasury Secretary Janet Yellen said the economy was not in a recession, but rather in a “period of transition” where “growth is slowing.”
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“The labor market is now extremely strong,” Yellen said. “It’s not an economy in recession, but we’re in a transition period where growth is slowing down. And that’s necessary and appropriate, and we need to grow at a steady and sustainable pace. So there’s a slowdown , and businesses can see that and it’s appropriate, given that people now have jobs and we have a strong job market.”
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Republican National Committee spokesman Will O’Grady told FOX Business that “redefining” what a recession is won’t solve some of the legislative actions Democrats are taking.
“Joe Biden has turned a recovery into a likely recession. Redefining the word won’t fix the fact that Democrats wasted $1.9 trillion, driving up costs for Americans. It further underscores how Biden and the Democrats are out of touch with the pain families are feeling,” O’Grady said.