Posted BY: Jon N. Hall
On July 28, the Commerce Department announced that in the second quarter U.S. gross domestic product shrank by 0.9%. If that number isn’t revised upwards, it will mean that 2022 has been a year of negative growth. Two back-to-back quarters of negative growth, as we’ve now had, has long been considered the very definition of “recession.”
Preparing for the possibility of a second negative quarter of GDP with its negative implications for the midterm elections, Biden officials issued talking points to their minions that a recession is most definitely not two consecutive quarters of negative growth, but rather a complex combination of other factors that we proles needn’t concern ourselves with. However, “a recession by any other name” would smell as foul.
To be fair, maybe the classical definition of a recession is a bit too simplistic. But it’s not as though GDP measures some discrete thing; GDP is whatever economists say it is. If they reconfigure GDP’s components, then its growth will be different.
The reason that the Bidenistas are so intent on redefining the word “recession” is because there is another economic indicator that cannot be redefined, and that’s “price inflation.” Though recession can be debated, the prices of energy and food can’t be; they are what they are, end of the story. If a gallon of gasoline is $5, you won’t allow some pointy-headed policy wonk in D.C. to tell you differently. That’s why the Democrats are so anxious to say we’re not in a recession, because having both inflation and recession going into an election smells too much like 1980.
Normal people might be a mite miffed at the Democrats for their infernal redefinitions. That’s because the Dems have been so consistently wrong lately about so many things that touch on the economy, especially their assurances that inflation would be transitory. Some analysts say that price inflation will be “sticky,” i.e. it will stick around for a while.