White House Refuses to Define “Recession” as GDP Shrinks; Biden: “We’re Not Going to Be in a Recession”; Critics Say They Changed the Definition

On 7/26/2022, with GDP data about to show a second consecutive quarter of contraction — the traditional definition of a recession — Biden said “we’re not going to be in a recession” and the White House launched an extraordinary effort to redefine the term. KJP refused to provide a definition, deferring to the National Bureau of Economic Research. A White House economic advisor dismissed the two-quarter rule as “a technical definition” that was “wrong” and called the debate “semantic.” Critics said the administration was changing the definition because the reality was too damaging.

”We’re Not Going to Be in a Recession”

Biden was asked directly before the GDP numbers dropped. “How worried should Americans be that we could be in a recession?” a reporter asked.

“We’re not going to be in a recession. In my view, the employment rate is still one of the lowest we’ve had in history — it’s in the 3.6 area,” Biden said. “My hope is we go from this rapid growth to steady growth. I don’t think we’re going to, God willing, see a recession.”

KJP Won’t Define It

Multiple reporters pressed KJP for the White House’s definition of recession. She refused every time.

“What is exactly the White House’s definition of a recession?” a reporter asked.

“We don’t — I’m not going to define it from here. I’m just going to leave it to the NBER,” KJP said.

“So we’re not going to hear the White House say there is a recession until the National Bureau of Economic Research has declared it?” the reporter pressed.

“The technical definition — Secretary Yellen said this on Meet the Press — is the National Bureau of Economic Research that looks at a broad range of data. I’m not going to get into a hypothetical,” KJP said.

A reporter noted NBER had “not declared a recession in 2008 until December — 12 months after the recession had already been in place.” The implication was clear: waiting for NBER meant the White House could deny a recession for a year after it began.

”Two Quarters Is Wrong”

A White House economic advisor went further, directly challenging the widely understood definition. “The idea that two quarters of negative GDP growth is a technical definition of a recession is wrong,” the advisor said.

A reporter pushed back. “You just described a 33 percent decline in GDP. That is the definition of a recession, my friend.”

“The definition is really crossing zero,” the advisor replied.

He then dismissed the entire debate. “I would really object to this kind of semantic claim,” the advisor said. “The technical definition considers a much broader spectrum of data points. We need to train our focus on that rather than on sort of technical debates about backward-looking data."

"Are People’s Feelings Wrong?”

A reporter caught the disconnect between the White House’s optimism and public sentiment. “Consumer confidence has been fairly dismal — those numbers have been flat-out bad for a couple of months. Yet you’re making the case the economy is actually pretty resilient. So are people’s feelings wrong?”

“No, absolutely not,” the advisor said. “These are very uncertain times. When you pull up at the gas station or go into the grocery store and see the highest prices, they not only create hardship, but they create uncertainty for what things are going to be like in the future.”

Senator Warren: Don’t Trigger a Recession

Senator Elizabeth Warren published an op-ed warning the Fed against raising rates too aggressively. “Before the Federal Reserve triggers a recession, Mr. Powell should remember that the one medicine in the kit doesn’t cure the economic illness that we have,” Warren wrote. “Manufacturing a recession that puts millions of Americans out of work may not even work on high prices.”

The Definition Battle

The administration’s refusal to use the word “recession” — even as the economy met the traditional two-quarter definition — became a story in itself. Critics accused the White House of changing the definition to avoid political damage. The White House insisted it was following established economic methodology by deferring to NBER.

The practical effect was that the administration could deny being in a recession indefinitely, since NBER typically takes 6-12 months to make official determinations.

Key Takeaways

Biden said “we’re not going to be in a recession” the day before GDP data was expected to show a second consecutive quarter of contraction.
KJP refused to define “recession,” deferring to NBER — which historically takes 6-12 months to make determinations, allowing indefinite denial.
A White House advisor said the traditional two-quarter definition was “wrong” and dismissed the debate as “semantic.”
Consumer confidence was “flat-out bad” but the White House maintained the economy was “resilient.”
Critics accused the administration of changing the definition of recession because the reality was too politically damaging.

Transcript Highlights

The following is transcribed from the video audio (unverified — AI-generated from audio).

We’re not going to be in a recession. The employment rate is 3.6. God willing, I don’t think we’re going to see a recession.
What is the White House’s definition of recession? I’m not going to define it from here. I’ll leave it to the NBER.
The idea that two quarters of negative GDP growth is the definition of a recession is wrong.
You described a 33% decline in GDP. That is the definition of a recession, my friend.
Are people’s feelings about the economy wrong? No, absolutely not. These are very uncertain times.
We need to focus on practical issues rather than technical debates about backward-looking data.

Full transcript: 1000 words transcribed via Whisper AI.