By Naveen Athrappully
The Biden administration is being slammed for attempting to change the definition of an economic recession, just ahead of the upcoming second-quarter GDP data that are expected to show contraction.
An economy is usually considered to be in a recession if it registers two consecutive quarters of GDP declines. A July 21 White House statement insisted that this “is neither the official definition nor the way economists evaluate the state of the business cycle.” In an interview with Fox News, Grover Norquist, the president of Americans for Tax Reform, called out the White House attempt to change the definition of a recession as “ridiculous.”
“They have to say ridiculous things like that, even have an argument with a dictionary… Sitting around the table with Biden are all the interest groups in the modern Democratic Party,” Norquist said, pointing to “big city political machines,” labor unions, and environmental activists as the “interest groups.”
He also blamed progressive ideologues for having policy agendas that are “disassociated from reality.”
The White House statement argues that recession is to be defined based on a “holistic look” at the data, including such factors as incomes, business spending, consumer spending, and the labor market. Based on these data, “it is unlikely” that a second-quarter economic contraction following the first-quarter decline indicates a recession, the White House said.
U.S. GDP already contracted in the first quarter, with the Atlanta Fed expecting second-quarter GDP to contract once more. The second-quarter GDP data are due on July 28.
The Epoch Times has reached out to the White House.
Norquist also raised concerns about the plan by 15 states to hand out inflation relief checks to citizens as a way to combat the financial pressure of rising prices.
Pointing to 10 states run by Republican governors that are aiming to phase their income taxes to zero, he said that sending a check is “just spending” and “not a tax cut.”
A Reuters poll of economists, conducted between July 14 and 20, found that median predictions point to a 40 percent probability of a recession in the United States in the coming year, with a 50 percent chance of it happening within two years.
This is a big jump from the 25 percent probability this year and 40 percent within two years as reported in June. More than 90 percent said that any recession would be mild or very mild. Four respondents expect the recession to be severe.
In a July 22 tweet, Chris Williamson, chief business economist at S&P Global Market Intelligence, warned that the American economy is contracting at a rate “not seen since the global financial crisis in 2009.”
It is not just the United States that is at risk of recession but the entire global economy. In an interview with Reuters, IMF Managing Director Kristalina Georgieva said that the agency will soon downgrade its 2022 global economic growth forecast for the third time this year.
“The outlook since our last update in April has darkened significantly,” she said. “We are in very choppy waters … The risk of recession has gone up. So, we cannot rule it out … It’s going to be a tough ’22, but maybe even a tougher 2023.”