For weeks, the media have been warning about a coming recession, historically defined as two consecutive quarters of declining real GDP. The Bureau of Economic Analysis is expected to announce Thursday that the GDP has declined for the second quarter in a row.
“Are We Already In A Recession? Yes, According To Fed Indicator With ‘Excellent’ Track Record,” reported Forbes July 1st.
“Atlanta Fed GDP tracker shows the U.S. economy is likely in a recession,” reported CNBC this month.
Earlier this month, Bloomberg published an article titled, “Long, Moderate and Painful: What Next US Recession May Look Like,” in which it listed all America’s post-WWII recessions, defining each one by the decline in GDP.
But in a July 21 blog post, the Biden administration decided that a recession is no longer defined by GDP.
“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,” said the White House. “Instead, both official determinations of recessions and economists’ assessment of economic activity are based on a holistic look at the data—including the labor market, consumer and business spending, industrial production, and incomes.”
With this, the White House was able conclude that there would not be a recession.
“Based on these data, it is unlikely that the decline in GDP in the first quarter of this year—even if followed by another GDP decline in the second quarter—indicates a recession.”
Within the week, the mainstream media had dutifully canceled the recession.
“Ignore the two-quarter rule. We might have a recession, but we aren't in one now,” wrote Paul Krugman at the New York Times.
“By one common definition — the economy shrinking for consecutive quarters — the U.S. economy is on the cusp of a recession,” tweeted Associated Press Tuesday. “Yet that definition isn't the one that counts.”
“The economy shrinking for two consecutive quarters would meet a longstanding assumption for when a recession has begun,” Associated Press tweeted separately. “But with the U.S. adding 2.7 million jobs over those same six months, economists say that wouldn't mean a recession has started.”
“Here’s how to know if we’re in a recession, and it’s not what you think,” reported CNBC.
“Everyone who cares knows that recessions happen when there are two consecutive quarters of negative growth — everyone, that is, except for the people who actually decide when the economy is in recession,” the article continued.
While Trump was in the White House, the mainstream media were fond of defining a recession as two consecutive GDP declines: