The Apocalypse may be upon us (US News):
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Recently, there has been much internet drama over a White House blog post discussing how economists determine what is or is not a recession. Specifically, the drama revolved around the following sentences:
"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."
(
www.whitehouse.gov/cea/written-materials/2022/07/21/how-do-economists-determine-whether-the-economy-is-in-a-recession/)
This has led to accusations of the White House "[changing] the definition of recession". These accusations primarily came from right leaning sources.
c.n.n. conducted an interview with clousems.
Mr clousems is an actual economist who, for the first time in his life, was able to provide useful insight on a topic.
"First, it's important to remember that the White House doesn't name recessions-- the NBER does. It's also important to remember that a calling something a recession doesn't mean much-- "recession" is just a way of describing a lack of economic growth.
"That being said, the blog post by the White House is misleading, since the 2-quarter rule is a near-universal benchmark that is taught in introductory economics courses around the country. It is not the "official" definition, true, but the 2-quarter rule tends to overlap with the NBER's definition of significant decline over a period of more than a few months, which is why the 2-quarter rule is popular. As for it being the way that economists evaluate the business cycle, that depends solely on the economist in question."
So, does this mean the government is engaging in evil, anti-Freedom, anti-Trump socialist propaganda, as is claimed by a certain news agency? Nope.
"One problem with recessions is that growth requires economic activity. When people hear the term "recession", they think the best action is to reduce their spending, which means that consumption falls. Since consumption is far and away the most important part of GDP-- investment's a total poser-- declining consumption will result in deepening the recession. So, the government will always want to avoid labelling something as "a recession" if possible. Additionally, being in a recession is never a good look, politically speaking."
DISCLAIMER: Mr. clousems has involvement in c.n.n.
