White House goes into full spin mode ahead of economic report, disputes definition of 'recession': 'Not the technical definition'

The White House is going into full spin mode ahead of a government report that could show the United States economy is experiencing a recession.

What is the background?

The U.S. economy shrank 1.6% in the first quarter of 2022, according to the Bureau of Economic Analysis.

Economic forecasts for the second quarter are split. Bloomberg's experts, for example, forecast a meager 0.5% growth, while Goldman Sachs economists predict 0.7% growth.

Unfortunately, the Federal Reserve Bank of Atlanta's GDPNow is predicting another GDP contraction of 1.6%. If that happens, the U.S. economy will have experienced two consecutive quarters of GDP decline, which meets the standard definition of a recession.

What is the White House doing?

Ahead of the BEA's first second-quarter estimate, which is expected on Thursday, the White House is downplaying a potentially bad report by denying what most economists agree is the definition of a recession.

For example, the White House Council for Economic Advisers published a blog post last Thursday denying the definition:

What is a recession? 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. Instead, both official determinations of recessions and economists’ assessment of economic activity are based on a holistic look at the data—including the labor market, consumer and business spending, industrial production, and incomes. Based on these data, it is unlikely that the decline in GDP in the first quarter of this year—even if followed by another GDP decline in the second quarter—indicates a recession.

Then on Sunday, Treasury Secretary Janet Yellen claimed on NBC's "Meet the Press" that if the U.S. economy shrank in Q2, then that does not mean the U.S. is experiencing a recession.

"I do want to emphasize: What a recession really means is a broad-based contraction in the economy. And even if that number is negative, we are not in a recession now. And I would, you know, warn that we should be not characterizing that as a recession—" Yellen said.

"I understand that, but you're splitting hairs," anchor Chuck Todd interjected. "I mean, if the technical definition is two quarters of contraction, you're saying that's not a recession?"

"That's not the technical definition," Yellen responded. "There's an organization called the National Bureau of Economic Research that looks at a broad range of data in deciding whether or not there is a recession. And most of the data that they look at right now continues to be strong. I would be amazed if the NBER would declare this period to be a recession, even if it happens to have two quarters of negative growth."

Meet The Press Broadcast (Full) July 24 - Former VP Al Gore, Rep. Elaine Luria, Janet Yellenyoutu.be

Brian Deese, director of the National Economic Council, regurgitated Yellen's clams in a CNN interview Monday morning, suggesting the administration's talking points emphasize denying the definition of a recession.

"In terms of the technical definition, [two negative quarters of growth] is not a recession," Deese said. "The technical definition considers a much broader spectrum of data points."