Argentine actor Guillermo Francella knew how to state the following in the skin of his famous character “Pepe” Argento: “When reality is distressing, what do you have to do? Deny it”. Indeed, this seems to be the new strategy of Joe Biden and the Democrats to face the United States’ economic recession.
According to the Bureau of Economic Analysis (BEA), the country will shrink by 0.9% in the second quarter of 2022. Add a 1.6 % drop in the first quarter, and the result is none other than what the Biden administration is trying to hide.
“The decline in real GDP reflected declines in private inventory investment, residential fixed investment, federal government spending, state and local government spending, and nonresidential fixed investment that were partially offset by increases in exports and personal consumption expenses (PCE),” the BEA specified as to the causes of the latest decline.
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What does it mean to go into recession?
Although Ronald Reagan popularized another definition while campaigning against Jimmy Carter in 1980, the popularly used purpose differs. According to the specialized site Economipedia, the technical definition of a recession is when “GDP declines for two consecutive quarters.”
“It is a decrease in economic activity over a period of time. A recession is generally considered to occur when the rate of change of GDP is negative for two consecutive quarters. It was commonly known as a ‘lean period,'” the website added.
However, the White House and the Democrats flatly denied the situation the economy is going through. For example, Janet Yellen, Treasury Secretary, assured that “this is not an economy that’s in recession. But we’re in a period of transition in which growth is slowing, and that’ s necessary and appropriate, and we need to be growing at a steady and sustainable pace.”
“So, there is a slowdown, and businesses can see that, and that’s appropriate, given that people now have jobs and we have a strong labor market,” the official added in an interview with NBC News.
In addition, Brian Deese, White House economic advisor, indicated that “it’s not the definition that economists have traditionally relied on.” However, RNC Research found that, in 2008, Deese argued that “economists have a technical definition of recession, which is two consecutive quarters of negative growth.”
The redefinition of recession
Some Democrat-allied media and think tanks are reinforcing this change in terms. On the press side, Ben White of POLITICO assured that “The White House is pretty obvious right when it says that even two-quarters of shrinking GDP would not show the economy is currently in recession.”
For its part, the New York Times wrote, “The U.S may register a second quarter of economic contraction, one benchmark of a recession. But that won’t be the last word.
In addition, the Center for American Progress stated that “The strong US labor market suggests the economy is not in a recession.”
In short, Biden and the Democrats came up with the magic formula to end the economic recession: deny it.