During his appearance on “Fox News Sunday” earlier this week, Jared Bernstein, a White House economic adviser, played coy on the definition of a recession, trying to argue we’re not really in one. This narrative, it turns out, is a pattern. A Thursday report from Neil Irwin at Axios had a piece, “White House: Even if GDP contracted, it’s not a recession,” which noted that the White House is trying to get ahead of the Commerce Department releasing its initial estimate of growth for the second quarter.
White House Council of Economic Advisers chair Cecilia Rouse and Bernstein, who is a member, are going with the National Bureau of Economic Research’s (NBER) definition of a recession, rather than what Irwin refers to the “colloquial” definition of two consecutive quarters of negative growth.
The NBER definition is more vaguely defined as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.”
Irwin references a blog post from Rouse and Bernstein published by the White House on Thursday, explaining that they’re going with NBER. Towards the end they claim that “Recession probabilities are never zero, but trends in the data through the first half of this year used to determine a recession are not indicating a downturn.”
Also written in Irwin’s piece though is that “Analysts expect the GDP report to show a soft 0.9% growth rate. More worrying, a ‘nowcast’ that models GDP growth from the Atlanta Fed suggests the Q2 number will print -1.6%,” with the Atlanta Fed having raised concerns for some time now about the United States being close to a recession. When the Wall Street Journal surveyed economists last month, they also found that we are increasingly likely to headed towards a recession.