White House article attempts get ahead of bad economy report

It appears that the economy has shrunk a second quarter in a row. In an effort to counter this news, the White House claimed that we are nowhere near an economic downturn. They continue their argument by suggesting that instead of using the two consecutive quarters of falling real GDP as a measure, a holistic one should be utilized.

From Fox News:

Recessions are technically defined by two consecutive quarters of negative economic growth and are characterized by high unemployment, low or negative GDP growth, falling income and slowing retail sales, according to the National Bureau of Economic Research (NBER), which tracks downturns.

Should the economy decline in the second quarter, it could meet the technical criteria for a recession, which requires a “significant decline in economic activity that is spread across the economy and that lasts more than a few months.” Still, the NBER — the semi-official arbiter — may not confirm it immediately.

The White House is now seeking to redefine what constitutes a recession before the data release, which is likely to show two consecutive periods of shrinkage. In a new blog post, White House Council of Economic Advisers chair Cecilia Rouse and member Jared Bernstein argued the economy is nowhere near a downturn as defined by the NBER.

“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,” they wrote, noting that a “holistic” approach takes into account the labor market, consumer and business spending, industrial production and incomes. “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.”

There are growing fears on Wall Street that the Federal Reserve will trigger a downturn as it raises interest rates at the fastest pace in three decades as it races to catch up with runaway inflation.

Fox News has the rest of the article here, and the White House has commented on this topic at this link.

Category: Democrats, Economy, Society