Politico’s Ben White characterizes this week as a “Category 5 economic storm,” but I think the dominant theme will be, “It’s not a recession, we swear!”
As much as economy-watchers will be studying the Consumer Confidence Index numbers on Tuesday and the Federal Reserve meeting and decision on interest rates Wednesday, the biggest deal will be the numbers for second-quarter economic growth, announced at 8:30 a.m. Eastern Thursday morning. We don’t know what the second-quarter economic numbers are going to be, but they’re probably not going to be good. The Atlanta Fed thinks it will show that the U.S. GDP shrank 1.6 percent in the last quarter. The previous quarter was a decline of 1.6 percent as well — so if the Atlanta Fed projection is correct, Thursday will bring news that the U.S. is now in a recession, at least by the traditional definition. (Even if it doesn’t, and it shows GDP growth at 0.0 or slightly higher, the U.S. is still in lousy near-recessionary conditions.)
Biden and his team will argue that, despite the numbers, the U.S. isn’t really in a recession. In fact, White writes that if Republicans declare we’re in recession, “It will not be true. At least not yet. But President Joe Biden and Democratic candidates across the country will face a daunting and possibly impossible challenge explaining to people why it’s not true.”
On Meet the Press yesterday, Yellin had the unenviable task of convincing Americans that even though it may look like a recession, sound like a recession, and feel like a recession, it’s not really a recession:
SEC. JANET YELLEN: I do want to emphasize: What a recession really means is a broad-based contraction in the economy. And even if that [second-quarter-GDP-growth] 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 —
CHUCK TODD: I understand that, but you’re splitting hairs. I mean, if the technical definition is two quarters of contraction, you’re saying that’s not a recession?
YELLEN: That’s not the tech —
YELLEN: That’s not the technical definition. There’s an organization called the National Bureau of Economic Research that looks at a broad range of data in deciding whether or not there is a recession. And most of the data that they look at right now continues to be strong. I would be amazed if the NBER would declare this period to be a recession, even if it happens to have two quarters of negative growth. We’ve got a very strong labor market. When you’re creating almost 400,000 jobs a month, that is not a recession.
The National Bureau of Economic Research isn’t exactly speedy about these declarations. Back in December 2008, it announced that the U.S. was in a recession . . . that had begun almost one year earlier in January 2008.