White House Director of the National Economic Council Brian Deese claimed Thursday that “virtually nothing signals” the U.S. is in a recession despite the newly released report showing two consecutive quarters of falling GDP.
“Squawk on the Street” co-host Carl Quintanilla asked Deese whether he anticipated the National Bureau of Economic Research (NBER) to declare the U.S. is in a “recession” amid the debate over the technical definition.
“Well, we’re certainly in a transition and we are seeing slowing as we all would have expected. But I think if you look at the full data and the type of data that NBER looks at, virtually nothing signals that this period in the second quarter is recessionary,” Deese said.
Deese noted the 3.6% unemployment rate and the labor market as indicators the U.S. is not technically in a recession.
The U.S. real GDP decreased at an annual rate of 0.9% in the second quarter of 2022, data released Thursday from the Bureau of Economic Analysis shows. Deese, as well as other members of the administration, have consistently pushed back on claims the economy is in, or headed toward, a recession. The administration said in a recent blog post that two consecutive quarters of falling GDP is not indicative of a recession. (RELATED: White House Economic Adviser Tries To Get Out Ahead On Definition Of Recession As GDP Data Set To Be Released)
The National Bureau of Economic Research uses several factors to determine whether the U.S. is in a recession. Economist Julius Shiskin wrote in 1974 that two consecutive quarters of declining GDP is a good rule of thumb to define a recession, with the definition becoming somewhat of a standard.
President and CEO of the American Consumer Institute Steve Pociask told the Daily Caller that the White House’s argument is “a little weak,” saying the general rule of thumb should be enough to declare the U.S. is in a recession.
“The definition of a recession, while it’s not completely set in stone, it’s pretty well recognized that if you have a situation where you have two or more quarters of decreasing economic output, that that pretty much is what the signal of a recession is,” Pociask said. “Now, there [are] some that will argue that to have at least six months of decline, that it needs to be apparent and certain statistics like the Gross National Product (GNP) in real terms and income and jobs report in manufacturing production, as well as business sales … but when you look at that, the GNP, the GDP really is the most comprehensive measure that takes into account all of that.”
“All economists should be comfortable with the basic statistic benchmark that two negative quarters is a signal for a recession,” he added.
But the debate about the technical definition does not matter as much to Americans who are feeling the effects of a contracting economy, a research fellow for regional economics at The Heritage Foundation, E.J. Antoni, told the Daily Caller News Foundation.
“At the end of the day the average American family has been going through economic pain for the last 18 months; paychecks are going out the door faster than they’re coming in because of inflation, credit card debt is getting more expensive to service, regular folks can’t afford a home, gas and grocery prices are going up,” Antoni said. “In my opinion, if you go out and talk to regular Americans it is so blatantly obvious the economy is contracting.”
Global business columnist and associate editor at the Financial Times Rana Foroohar made a similar point Tuesday while speaking on CNN.
“Well, look, people feel like they’re in a recession whether they are or not. I mean, there’s a lot of debate about technical recession, at the end of the day, Ana, you and I know it’s about how you feel. Do you have money in your wallet? Are you buttoning up your pocketbook? And people clearly are. We’ve all felt the cost increases at the grocery store, at the pump – although gas prices have gone down a little bit, that’s one silver lining. But, folks are not feeling good. They are feeling in a pinch right now.”