de Wolff: Yes, This Is a Recession
Playing word games won’t disguise the fact that Americans are hurting.
For the second straight quarter, the United States’ economy has shrunk, according to the Bureau of Economic Analysis. What does this mean? Conventional wisdom would say the economy is in a recession. But statements coming from the upper echelons of our government, such as Treasury Secretary Janet Yellen’s denial of this fact, would lead one to believe that this is not the case. Their motivations for doing this are simple: If the economy is doing poorly, that bodes ill for the ruling Democratic Party come November. Official recognition of this fact would mean an admission of guilt, but no amount of hemming and hawing can disguise the fact that the economy is approaching a dangerous place. Instead of trying to cover up their mistakes, the Biden administration should own up to the situation it is in, or else they will be soundly rebuked in November.
Democrats used to think differently about defining a recession. On Tuesday of this week, one of President Biden’s chief economic advisors, National Economic Council director Brian Deese, insisted that two negative quarters of GDP growth is not the technical definition of a recession. However, back in 2008, he stated that “economists have a technical definition of recession, which is two consecutive quarters of negative growth.” In 2008, Speaker of the House Nancy Pelosi also said that a recession is two quarters of negative growth in a row.
Even the media agrees with this diagnosis. More recently, in 2015, the Washington Post explained that “two negative quarters in a row is a standard indicator for an economic recession.” In 2020, CNN Business stated that “economists normally define a recession as consecutive quarters of negative growth.”
What changed? Unlike in 2008 and 2020, Republicans are no longer the ones who will take the blame for a recession. Now, the Democrats are in power, with midterm elections being just three months away putting them in the hot seat. Any official acknowledgment of a recession will not help their precarious position heading into November.
This approach, while misguided, is hardly surprising. These are the same people who tried to argue that inflation would only last for the duration of the pandemic, despite last month's data revealing that inflation actually increased by 9.1% from one year earlier. When Democrats tell Americans that we are not in a recession right now, but prices on everything from gasoline to bacon and eggs are soaring, and real wages are stagnant or falling nationwide, this will only further erode the already-fractious relationship between Americans and their government.
Bereft of any meaningful guidance from the top, when it comes to recessions, perhaps people should borrow from former Supreme Court Justice Potter Stewart. Referring to obscenity, he said, “I know it when I see it.” Americans facing rising prices, falling wages and a contracting economy — plus no acknowledgment of their plight by their government — know a recession when they see one. Instead, they will turn to those who acknowledge the hard facts of this predicament.
George H.W. Bush faced a recession leading up to his 1992 re-election campaign, and his lack of empathy for the economic struggles of Americans dealing with the recession was a definite factor in his defeat. Similarly, disparaging the harsh realities facing Americans today will hurt Democrats on the ballot this year.
Democrats should be wary of continuing their foolish approach where they deny basic reality. Only three in 10 Americans approve of President Biden on the economy. Recently, even 56% of Democrats think we are in a recession. What’s more, 62% of Democrats say that things in this country are going at least “pretty badly” in general. When Democrats, who are most likely to think the best of Biden’s presidency, are panning it, Democrats should take heed. Stop this feeble attempt at countersignaling before it’s too late, or else Americans will thoroughly reject Democrats and their agenda at the polls in November.