Summary : Cassidy has a point: If you do a Google search for the definition of the word “recession,” the top dictionary result calls it “a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.”
But economists don’t use a simple rule of thumb to figure out when the economy is in recession At the same time, some of the voters who tell pollsters they think the economy is in recession could be saying so because they have heard Republicans say it so many times on TV. And there is a real risk of recession around the corner, with the Federal Reserve hiking interest rates in order to bring inflation down.
Sen. Roger Marshall (R-Kan.) offered his own recession metric: “Recession, to me, is when I go back home and the community bankers say, ‘Hey, Doc, what’s going on?
WASHINGTON ― For the past month or so, Republicans have insisted that the U.S. economy is in a recession, a period of reduced economic activity that can be politically devastating for the party in power.Then, on Friday, the U.S. Labor Department announced the economy added half a million jobs last month, pushing the national unemployment rate down to 3.5% ― almost as low as it has ever gotten, and a strong indication that the economy is not, in fact, in a recession.HuffPost asked the five Republican senators at the presser how July’s job growth could happen in a recession. Sen. Bill Cassidy (R-La.) pointed out that in the first and second quarters of the year, the U.S. saw negative growth in gross domestic product, an important economic metric.Cassidy has a point: If you do a Google search for the definition of the word “recession,” the top dictionary result calls it “a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.”But economists don’t use a simple rule of thumb to figure out when the economy is in recession ― they follow the determinations of the National Bureau of Economic Research, a private nonprofit organization that’s served as custodian of the business cycle’s ups and downs since the 1960s.In a “Frequently Asked Questions” page on its website, the NBER explicitly rejects the two-quarters definition, stating that “GDP could decline by relatively small amounts in two consecutive quarters without warranting the determination” that economic activity had peaked and begun to fall. The GDP readings this year showed modest declines for somewhat technical reasons, such as decreases in private inventory investment by businesses.A tricky thing about the recession debate is that the recession determination comes many months after the fact, following revisions to the government’s various monthly reports on jobs, income, consumer spending and manufacturing. So even after a recession starts, there’s no official declaration until later.Now, just because there’s strong job growth, that doesn’t mean people should be happy with the economy. Consumer prices have been rising at the fastest pace in decades, including at a 9.1% rate in June. Consumers are especially buffeted by volatile prices for food and gas, and consumer sentiment, as measured by surveys, has been remarkably low. Surveys also show that voters believe the economy is in a recession, and Republicans want those voters on their side.At the same time, some of the voters who tell pollsters they think the economy is in recession could be saying so because they have heard Republicans say it so many times on TV. Since a bad economy could benefit Republicans in November’s election, they have an incentive to paint as dire a picture as possible, and less incentive to present a more nuanced, more truthful picture.What’s strange is that Republicans are exaggerating economic problems when the public already strongly dislikes what’s going on. And there is a real risk of recession around the corner, with the Federal Reserve hiking interest rates in order to bring inflation down.Sen. Roger Marshall (R-Kan.) offered his own recession metric: “Recession, to me, is when I go back home and the community bankers say, ‘Hey, Doc, what’s going on? Business is slowing down. Why are people afraid to invest?’”
