White House Tries to Change Standard Definition of "Recession" Ahead of Upcoming Economic Report

Ahead of second quarter gross domestic product (GDP) numbers being released this Thursday, the Biden administration is looking to stray from how recessions are usually defined.

The U.S. economy has already suffered negative GDP growth in the first quarter of the year, meaning that the economy is already in recession if Thursdays numbers show negative growth. 

Ahead of their release, the Biden Administration posted an article to the White House blog answering the question "What is a recession?" where they veer from the traditional definition; "While some maintain that two consecutive quarters of falling real GDP constitute a recession, that is neither the official definition nor the way economists evaluate the state of the business cycle." Naturally, many are interpreting this seemingly out-of-nowhere blog post as being to soften the blow of negative growth numbers this Thursday. 

It's also possible that the White House is well aware that there will immediately be articles proclaiming a recession on Thursday if growth is negative, and this enables the so-called "fact checkers" to say "not so fast" and limit the spread of that narrative.  

While the "two quarters of negative economic growth" definition of a recession is almost always used, the Biden administration is *technically* not redefining what a recession is, as it's the National Bureau of Economic Research (NBER) that gives the official judgment on when the U.S. economy is in recession, and they do incorporate other variables. However, it is the most used definition for a reason, as the most recent time the NBER called a recession without there being two consecutive negative quarters of economic growth was in 2001. In every single other time a recession has been called by the NBER, it's fit the "two quarters of negative growth" definition. 

Press Secretary Karine Jean-Pierre was asked about the blog post, and if its purpose was to hedge bad economic news. "Is the White House trying to change the common definition of a recession?  Because next Thursday, the GDP numbers coming out are going to show that we’ve been in recession," the reporter asked.

Jean-Pierre channeled Vice President Kamala Harris in her nonsensical response, telling the reporter  "You know, the strength of our labor market, along with the other economic factors, is what we generally see in a recession or even a pre- — a pre- — what — is not what we generally see in a recession, or even a pre-recession, because we’re seeing the strength of the economy and the labor market. So that’s really important to note back there because those are key elements, as we talk about that, as folks keep asking us about that."



Matt Palumbo is the author of The Man Behind the Curtain: Inside the Secret Network of George Soros

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