To be, or not to be (in a recession), that is the question, and it is a question the Biden administration seems to think can be answered however they jolly well please.
Traditionally, economists defined a recession as two consecutive quarters of economic contraction. The last ten times this has happened, a recession was subsequently called. Given the economic data from the last two quarters—GDP fell by 0.9 percent in the second quarter following a 1.6 percent contraction in the first quarter—it is safe to say we are in a recession now.
Economist James Knightley claimed a downturn was “really only a matter of time," considering the pressure on American households from inflation, equity markets, and the coming “housing downturn,” which he said “reinforces the feeling that it’s only a matter of time before we’re in a proper recession.”
The Biden administration, however, still holds that we are not in a recession.
The White House claims that “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.” The statement goes on to say the National Bureau of Economic Research (NBER) defines a recession as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.”
Yet the traditional definition, two quarters of economic contraction, works in tandem with NBER's definition. When there has been a significant decline in economic activity for more than a few months—six months, in the case of two fiscal quarters—we're in a recession.
Honestly, I find these parlance quarrels frustrating. Maybe two quarters of economic contraction should not be the definition of a recession. Perhaps the NBER won't even declare that we're in one. That does not change the fact that the economy today is experiencing a significant downturn, one that is crippling American workers.
The definition of “recession” can surely be changed on a whim, but that does not change the reality we experience in periods of sustained economic contraction, which we have long used the word “recession” to describe. Language and thought are intricately intertwined. The way we interact with the world relies upon a tacit background of language, customs, habits, and dispositions.
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Our actions, the rules we follow, and our very perceptions of truth are based on a shared language. In this sense, the Biden administration can quite literally convince itself that we are not in a recession, and it will be true, at least in the sense that it will govern their actions. So, when Treasury Secretary Janet Yellen claims our current economy is “resilient,” she may very well believe it. And as our technocratic overlords continue to fact check us, they perpetuate their perceived reality.
We mustn’t expect the Biden administration to actually do anything about this problem. In fact, they really aren’t worried about our economic woes—they are busy going after climate change.
While they attempt to change how we perceive the state of our economy, it continues to suffer gravely. Americans know this, too. As Shakespeare’s Belarius, who has himself undertaken a great act of deception, claims: “How hard it is to hide the sparks of nature!”