Whether the United States is in a recession is complicated. The full and exact definition of a recession – in the U.S. – is whether the panel of experts at the National Bureau for Economic Research says it’s a recession. It’s also true that the NBER is much more likely to say “Yep, that was a recession,” than it is “This is one.” Its view is historical rather than current.
However, there’s a further step to take here. That common description of a recession as being two-quarters of falling GDP is still important. Of course, the NBER doesn’t rule on whether other countries have recessions or not. But the description for all those other countries is that two quarters of successively falling GDP. So to concentrate upon the NBER ruling is, perhaps, to take the bureaucratic ruling as being more important than the reality outside the window.
At which point we’ve got a rash of pieces across the press making this exact NBER point. That technical, bureaucratic, one, not the reality outside one.
NPR reported: “While two consecutive quarters of negative growth is often considered a recession, it’s not an official definition. A nonprofit, non-partisan organization called the National Bureau of Economic Research determines when the U.S. economy is in a recession. An NBER committee made up of eight economists makes that determination and many factors go into that calculation.
“The White House has pushed back against calling the current economy a recession.”
Well, yes, the White House would, wouldn’t it?
HuffPost said: “U.S. Economy Shrinks For A 2nd Quarter, Raising Recession Fear. Consecutive quarters of falling GDP constitute one informal, though not definitive, indicator of a recession.”
Yeah you know, it’s not real until the committee rules.
From CBC (yes, we know, Canadians): “U.S. GDP shrinks for 2 quarters in a row, meeting bar of what some say is technical recession.”
Some say, eh?
Newsweek reported: “…it marks the second quarter of negative GDP, fulfilling requirements of a commonly held definition of a recession. “
CNN Business said: “While a recession is commonly defined by two consecutive negative quarters of gross domestic product growth, there’s no steadfast rule governing what defines a recession in the United States. “
As we’ve pointed out this is, strictly, true, and yet by the standard used everywhere else in the world that 2 quarters does work.
So, what’s actually going on here? The answer – and we insist we are not cynics for pointing this out – is the electoral cycle. It’s not a huge surprise to anyone that the media currently leans Democratic, liberal, possibly even progressive. The D, liberal tendency is currently in triple power: presidency, Senate and House. A recession on their watch would not be a good look. Especially with the primaries for the midterms pretty much over and the actual election campaign about to start. So, the caveats, the persnicketiness, could well be explained just by that.
It falls to The Guardian – a left-liberal UK paper but one that has the unfortunate habit of sometimes blurting out the based truth – to tell us that “On top of that, you can bet that were the Republicans in power, Democrats would be calling two-quarters of GDP decline a recession.”
Well, yes. And that the American media is falling over backward with the caveats and the bleatings about NBER just shows us which side that media is on, doesn’t it?