President Joe Biden dismissed talk of a potential recession Monday, ahead of upcoming GDP numbers that many experts anticipate will point to a recession.
Speaking to reporters after a press conference on the $52 billion “CHIPS Act” currently making its way through Congress, Biden was asked by Fox News White House reporter Peter Doocy about fears of a potential recession, as many economists expect second-quarter Gross Domestic Product growth to decline for the second consecutive quarter, indicating that the U.S. economy is in recession.
“Mr. President, we’re getting GDP numbers on Thursday,” Doocy called out. “How worried should Americans be that we could be in a recession?”
“We’re not gonna be in a recession, in my view,” Biden replied, speaking over Zoom because of his recent diagnosis of COVID-19. “The [un]employment rate is still one of the lowest we’ve had in history, it’s in the 3.6 [percent] area. We still find ourselves with people investing. My hope is we go from this rapid growth to steady growth, so we’ll see some coming down. But I don’t think we’re going to, God willing, I don’t think we’re going to see a recession.”
Biden: "We're not gonna be in a recession."pic.twitter.com/TylryJ5Jp8
— Daily Wire (@realDailyWire) July 25, 2022
Biden’s comments come as his administration scrambles to do damage control, as the economy moves toward a possible recession. The standard rule of thumb in identifying a recession is two back-to-back quarters of negative GDP growth; that rule was created in 1974 by economist Julius Shiskin.
But in recent days, members of the Biden team have been pushing a broader definition of recession from the nonprofit National Bureau of Economic Research, which the White House has called “the official recession scorekeeper.” The NBER defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.”
The White House began its damage control campaign in a blog post published on its official website Thursday. “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,” White House officials wrote. “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. 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.” The White House referenced the NBER definition of recession in its post.
Treasury Secretary Janet Yellen also dismissed the common definition during an appearance on “Meet the Press” Sunday. “A common definition of recession is two negative quarters of GDP growth, or at least that’s something that’s been true in past recessions,” Yellen said. “When we have seen that, there has usually been a recession. And many economists expect second-quarter GDP to be negative. First-quarter GDP was negative. So we could see that happen, and that will be closely watched. But I do want to emphasize: what a recession really means is a broad-based contraction in the economy. And even if that number is negative, we are not in a recession now, and I would, you know, warn that we should be not characterizing that as a recession.”