White House Changing the Definition of Recession Ahead of Possible Dismal Economic Report
Um, what: “both official determinations of recessions and economists’ assessment of economic activity are based on a holistic look at the data.”
The left excels at changing definitions when it suits them.
We expect a dismal economic report this week. We expect another report with a falling Gross Domestic Product (GDP), which shows the state of our economy.
The definition of GDP from the Bureau of Economic Analysis at the U.S. Department of Commerce:
The value of the goods and services produced in the United States is the gross domestic product. The percentage that GDP grew (or shrank) from one period to another is an important way for Americans to gauge how their economy is doing. The United States’ GDP is also watched around the world as an economic barometer.
The consensus is that a recession is when we have “two consecutive quarters of negative growth.”
The first quarter of 2022 saw America’s GDP shrink “at an annual pace of 1.6%.” This was in the “third and final revision by the Bureau of Economic Analysis.”
If America had negative growth in the second quarter, we would be in a recession. That is not good news.
The White House and Secretary of Treasury Janet Yellen are trying to get ahead of the report by changing the definition of recession.
White House Council of Economics chair Cecilia Rouse and member Jared Bernstein tried to explain how economists determine a recession with a bunch of mumbo jumbo. I had a hard time getting past their insistence that “both official determinations of recessions and economists’ assessment of economic activity are based on a holistic look at the data.” That was only the second line.
But read that again.
“Holistic look at the date.” What is that?! What does that mean?
In other words, they get to decide what a recession means. They can make the report as pretty and happy as they want to, even if it’s an awful report.
Wait, it gets better. Rouse and Bernstein tried to use the recession definition from the National Bureau of Economic Research (NBER)to strengthen their argument.
Except…the definition matches the consensus. The definition voids their argument:
The National Bureau of Economic Research (NBER) Business Cycle Dating Committee—the official recession scorekeeper—defines a recession as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.”
A quarter is three months. Two quarters are six months. That means two quarters are “more than a few months.” Shoot, even one quarter is “more than a few months.”
Yellen, who we should watch closely, made it worse on Meet the Press with Chuck Todd:
TODD: “If the technical definition is two quarters of contraction, you’re saying that’s not a recession?”
YELLEN: “That’s not the technical definition. There is 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 they would declare this period to be a recession, even if it happens to have two quarters of negative growth. We have a very strong labor market. when you are creating almost 400,000 jobs a month, that is not a recession.”
So Yellen wants to use the same definition that voids the blog post by Rouse and Bernstein.
Yellen digs a bigger hole because when you have to explain, you’re losing:
“But you don’t see any of the signs now — a recession is a broad-based contraction that affects many sectors of the economy—we just don’t have that. Consumer spending remains solid. It’s continuing to grow. Output, industrial output has grown in five of the six most recent months. Credit quality remains very strong. household balance sheets are generally in good shape.”
Remember that while people have jobs, their salaries are not going up with prices.
Yellen is not wrong, but she does not expand. Our balance sheets are in good shape, but we’ve all had to drastically cut our budgets and lifestyles.
Then Yellen admits the administration is just flailing to try to get control of the economy when in reality, they need to back off:
“But inflation is way too high. And, you know, the Fed is charged with putting in place policies that will bring inflation down and I expect them to be successful. The Administration, for its part, is supplementing those Fed policies with things we can do. We’ve cut the deficit by a record one-and-a-half trillion dollars this year, releases of gas from the Strategic Petroleum Reserve are putting some downward pressure on gas prices. we have seen gas prices just in recent weeks come down by about 50 cents, and there should be more in the pipeline. And hopefully we will pass a bill that will lower prescription drug costs and maintain current levels of health care costs.”
Lord help us.
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Comments
The blathering of failed central planners.
There are no central planners because there is no central government organized well enough to do any planning. Currently the government is being run a dozen different factions which are at odds with one another working at cross purposes, and no one knows who is actually in charge.
That works for me.
Yeah, but you are right in calling them central planners because they are very comparable to the USSR when they had central planners. They didn’t work out either.
The left, which always sticks to its narrative is never bothered by facts
According to the White House – Recessions are doubleplus good.
That’s right. When Biden’s Alzheimer’s test came back positive they. just relabelled it and said he had COVID.
Of course they will. This is the party who elected a hillbilly who quibbled with a judge over the meaning of “is”
Yeah, but he never had sex with that woman, Miss Lewinsky.
He never had sex with Hillary either.
It would be hard to fault him for that.
Such an utterly dishonest, infantile and indefensible stunt, by the dotard-marionette’s handlers/chaperones/caretakers in the White House geriatric ward. If established fiscal/economic terminology and nomenclature prove to be inconvenient and harmful to one’s political fortunes, simply change the definition in question to something that is more politically self-serving and less damaging to one’s narrative.
This is appallingly dishonest chicanery, but, I’d expect nothing less from the vile Dumb-o-crats.
There’s no definition except things are a little worse than the used to be for longer than normal. The technical definitions are an invention of nail-biting headline writers after eyeballs, or regulators anxious to avoid them.
A depression is a lot worse than it used to be.
When the “Postman” came by I ask him about that and he said, “Stuff is getting better, stuff is getting better every day.”
He forget my letter, but after a minute he rode back on his horse and snatched it out of my hand.
The administration can ensure that it will never preside over a recession by defining it as a period of sustained economic growth, high employment and low inflation.
They’ve been using seasonal adjustments to the economic data to shape the curve to fit their narrative for so long that they have lost any sense of being tethered to reality. Who knows what the real numbers are anymore. All we know is that it is bad and getting worse. Political pollsters are more reliable than the reported government economic numbers.
Tukey *(Mr. Time Series analysis) came not to believe in seasonal adjustment because the difference between a process having seasonality and a process apparently having seasonality cannot be defined. “Any finite-extent function can arise, to an arbitrarily close approximation, as a sample from a process with any spectrum.”
I’ve really had quite enough of this Orwellian bullsh*t.
Hey, kids!
It’s time to adopt a new definition of “political assassination.”
It’s only murder if you use a morningstar or a halberd.
Everything else is considered a “parking infraction..”
See you! Have a good time!
Depression is getting a 401k statement which lost a bit over 20%, with projections that is likely to hit 40%. Then when I go to buy stuff prices have increased 20% and up. sometimes 200% or more. Especially building supplies.
This re-definition of recession is child’s play for a society that has decided that men can become pregnant and that 2+2=4 is racist.
Very good observation. Now that Dumb-o-crats have become totally inured and nonplussed to brazenly bending reality to suit their self-serving political whims, casual and flippant mendacity and dishonesty become reflexive and unabashed responses to politically inconvenient facts and circumstances.
Look how many definitions have had to be changed due to the left.
Political malpractice. Trying to avoid pulling the trigger and saying the magic word ‘recession’ is tempting for the Admin. Telling the American people that our economy is stronger than they realize and things are ACTUALLY better than what they see is flipping stupid.
Consumer spending is just about tapped out. Consumer debt is running high. ATT just announced a large number of delinquent bills. Lots of delinquent renters. The folks who didn’t have a safe Govt Job or corporate employment. during the Rona Mania do not, by and large, have a healthy household balance sheet.
If the economy is doing so much better than we see then what’s the justification for forgiveness of student debt? Or deferred evictions or further Federal dollars being pushed out? Either the economic situation is poor which might arguably justify those measures or it isn’t. Can’t be both.
The Admin is shooting themselves in the foot with this BS and it’s going to hurt them in the midterms. Especially so if they monkey with the 2nd QTR stats to avoid a decline then have to readjust to reality in OCT when the 3rd QTR stats are released. Political malpractice, IMO.
There’s nothing wrong with changing outdated definitions of various terms used in any field. But (1) you don’t do it just when the old definition is about to hit you in the face; if you’re being honest about the old definition being outdated why didn’t you notice this last year or five years ago, when the news was all good? (2) Once you change the definition you can no longer make any comparisons between stats from before the change and after.
Actually, yes there is when said definition is applied to an equation used for calculating metrics.
That’s what this is all about.
Hiding the true costs while they bring Marxism in through the back door.
This is a standard psyop technique because the planners know 2 things.
The average person is not overly educated
The average person wants to believe they are for their pride so they go find the numbers that “suit” their worldview and then argue them to sound “smart”.
So, the quick way to bring about public opinion is to swap definitions into nebulous meanings because they know the “average guy” doesn’t have the skillset to do this.
Chances are you and I both make a large part of our living digging into the fine details for our respective professions.
One example of a BS metric
The EV “metric’ of MPGe (miles per gallon electricity)- a meaningless nebulous metric used to compare an EV t an ICE yet the truck still only goes 80 miles before the battery is dead with a full payload.
There are thousands of those.
So, yes, there is plenty wrong with changing a definition depending on what that definition is used for and effects down the line.
The importance of reading an entire comment you’re responding to, before responding to it, can never be overemphasized.
and I did and my words were very pointed and specific relating to that “entire comment”
Call it by its proper name: Joe Biden’s No Good Very Bad Totally Avoidable and Completely Unnecessary Recession That He Caused.
On the news this morning one of the BiDung regime’s official liars was asked whether increased government spending was a cause of inflation. His answer was, “President Biden has not made an official determination on that.” In the fascistic realm of this Democrat regime, even centuries old basic economics is only true if it has been granted the status of Official State Policy.
I think we are already in a recession.
However, I will note that where I live the price of gasoline has dropped from $4.79 per gallon to $4.09 per gallon in just the past 3 weeks. So that is encouraging.
Guess again
Part of that is just the normal “close to end” of summer adjustment.
Another part of it is the interest increase at the Fed which will go through the accounts making maintenance and turn arounds more expensive ( you will see this come back with interest in a few months when the winter needs come in)
Nobody has done anything good and this isn’t a sign of anything getting better- it will in fact get much worse.
JR,
Taurus can lay this out much better than I can because he has experience in/around the oil/gas industry. In my brief pre Army career as an investment advisor I was taught to pay close attention to a handful of things; this is one of them so here goes.
Refineries are basically running near capacity. There isn’t much slack refinery capacity. We haven’t built a new green field refinery in the USA since the late 1970’s. Existing refineries have been added to and more production capacity coaxed out of them with various tech upgrades and tweaks.
Maintenance and replacement of equipment for refineries is a pain in the ass. First you take capacity off line which costs money. Then you have to pay for the equipment and the installation and whatever other work can be done while that portion of the refinery is idle. More importantly you have to deal with red tape from local, State and Federal regulators. They have to approve the project as meeting their interpretation of the regulation. Until that happens that portion of the refinery stays idle. That’s the short version, if environmental groups stir the pot with protests or nuisance lawsuits and some member of Congress gets involved….. it becomes q more lengthy process.
All that to say, maintenance is sometimes deferred far too long to avoid the hassles or less often because the refinery owner is a cheapskate. When equipment goes too long without maintenance things break, usually sooner than the expected life due to increased strain.
Our refineries are more stressed than usual. The yield from a barrel of oil from a particular refinery ie X gasoline, Y diesel, Z heating oil. There’s other products but for now let’s keep it simple. As summer drive season pulls back demand for gasoline drops and they shift to more heating oil and diesel.
Problem is upcoming maintenance periods will likely be more complicated than normal due to increased strain. That means a delay in production of heating oil and diesel. Diesel is already in short supply and stocks of heating oil are relatively low. So winter blend from refiners is likely to be more expensive. Including gasoline.
Pease feel free to correct my simplistic, amateur explanation.
Taurus has a weird level of ‘experience’ in multiple industries. Before we bow to the all-knowing taurus, maybe let’s find out what is real and what is not? Since he’s been here at LI, he’s been an “expert” in numerous fields. I find this interesting and amusing, but let’s not put all our eggs in a basket that is all things to everyone. I’m pretty sure that’s a recipe for disaster.
@ Fuzzy
That’s really a petty juvenile response based in nothing but an emotional rant from someone who clearly insecurity issues but be that as it may.
I invite you to feel free to find out what’s “real and not” regarding everything I say and evaluate the points discussed according to the merits as they apply. People who know what they are doing don’t fear this level of review- we live in it because I don’t get paid to be wrong.
Then ask yourself this: Given the number of professionals here (Lawyers, military, Medical doctors and all other professions), if my comments were so “wrong and off base”- don’t you think they would be all over me correcting and admonishing my words with all kinds of links and what not? (Actually, most AGREE on the overall points and have SIMILAR EXPERIENCEs of their own which they share)
Could you define a “weird level of experience” please?
Thank you
Fuzzy,
I don’t find varied experience unusual probably I possess experience and training at multiple skills. I was an enlisted Soldier out of HS, then a college student including law school. During my student years I worked for the state utility regulation commission to help pay my way as well as the NG. Then I was an investment advisor. In 2001 I went back into the AD Army until I was retired with a disability. Then I bought and rented houses for 6 years before selling those properties in the first months of Rona.
I am sure many others here have similar varied experiences of multiple jobs, skills, training and career paths. The commenters here at LI collectively do a pretty good job of sniffing out BS and calling out inaccurate or misleading information. Some more so than others. That’s why I invited more expert explanation as the last line in the post, open to any and all.
That explanation was pretty much spot on but let me add to a few key points to clarify it for those who don’t speak the language of up and downstream production.
The key point I see in the media (kinda of a psychological Pavlov’s dog response) is the automatic equating a barrel of oil to a barrel of fuel ( regardless of what type)- that’s not correct but it misleads people into a false belief ( which personally I think was the goal all along was to keep people from seeing the truth)
In a different layman’s explanation with basic charting- a refinery is a pie chart with “x” amount of that oil per barrel going to (gas, kero, diesel, other fuels, lubricants, plastics, industrial chemicals and everything else)
From that perspective in order to decode media speak…
To say :”We have the refining capacity to make all the gas we need” is a true statement in context with raw capacity. – What they “didn’t” say was that to produce all the “gas” we need- other items have t0 suffer.
Putting the 2 together is why they say we don’t have enough “capacity” which means for 100% of everything in the column and in that context we are clearly losing the “capacity” war and need both new additional capacity and to refurbish current capacity.
All major players look at the projections and tool and allocate resources based on speculative demand by column sector which is why “imported gas and oil” artificially drops that part so they can allocate elsewhere. (if anyone ever wondered why its “cheaper” to buy gas rather than refine it ourselves)- Its not “cheaper” in the refining sense but its cheaper because those other products don’t have that hidden USG “fees” they skim off the top for production of fuels.
Its a complex game and takes a long time to learn.
Continuing this administration’s obsession with fooling the citizenry about their agenda, competence and policies (and the cognitive capacity of the front man).
Remember: Politics is war by other means.
“but consumer spending remains strong”
Yeah- cuz you need to spend every cent you’ve got to pay twice as much for the same stuff you paid half as much for last year. I think that’s one of the main pillars of inflation.
Here we go boys and girls (and thems), Recession 101:
Last year it cost me $100 to produce 100 thing-a-ma-jiggers. I sold them for $105 for a 5% profit which gives us our GDP base for year 2.
This year, The we sell only 95 thing-a-ma-jiggers that cost us $105 to produce. We sell them for $1o8. Raw GDP is up 2.8% year-over-year.
White House Press Release: Yeah! No recession! Sales are up! Profits are lower but still strong. Jobs are strong! People are still spending!
But we sold 5% fewer and our profit is down and our costs are up dramatically due to inflation. The company may or may not have laid anybody off due to lower production levels but if they haven’t yet, they will in the next month or two. The death spiral begins as fewer people will be buy our thing-a-ma-jiggers.
What they are hiding (or covering up) is that GDP figures are inflation adjusted for just this scenario. The calculation offsets the 2.8% increase in revenue by the 10% to 15% inflationary effect of reduced demand by volume and increased costs to produce fewer units.
Class dismissed.
They have changed the meaning of everything:
1. Alzheimer’s means mentally fit for the highest office in the land.
2. Blow your way to the top means you’re VP
3. Can’t remember is called circle back
4. The buck stops here means Putin’s fault
5. A woman with a worthless degree means you’re Dr. Jill
6. Lowest voter approval of any president means you’re running for re-election
7. My Depends is full of shit means taking a lid
8. COVID vaccine doesn’t mean anything.
9. My crackhead son is the smartest man I know.
10 God’s gift of the rainbow is now the symbol of the greatest abomination ever.
What a surprise. Stupid communists fail yet again and then try to redefine the language to cover it up. We haven’t seen this play before…
I can’t help but think of a line from The Outlaw Josey Wales.
“Don’t piss down my back and tell me it’s raining.”
It’s only a recession if it can be blamed on Trump or the Republicans. Soon to come.
That would be a “ghost recession”, ghost dog.
1. Inflation, as measured in the 1970’s – a fixed basket of items – has been running perhaps 10 percentage points above wage increases for some time. However you define it, that must end in “recession”, as purchasers MUST eventually buy fewer numbers of goods and services.
2. What the administration is scared to death of is a headline in the NY Times, “We are in a Recession”. Those kinds of headlines have a psychological impact and some consumers will voluntarily cut back in response. The Q3 report comes just before the election, not an opportune time for the Dems.
The NYT will not run that headline until told to do so.
The recession started in Q1, when real GDP declined. The same thing happened in Q2. We are in recession, no matter what Senile Joe and his minions think. The public sees through it, and the public will punish the Democratic Party this November,
The denial is strong with this regime!
Old Yeller is just one more example of a dismal collection of incompetents they call a Cabinet. Do they all have to wear name tags at their little hootenanny events so the senile ice cream loving, diaper filling White House occupier gets a little hint as to why these unknown folks have arrived at the meetings?
She’s qualified to wait tables, anyway.
Old rule: Any reversal — positive or negative — that happens after the second quarter won’t affect the November election. Add to that the fact that the media’s confidence level is at 16% per Gallup, and the goose is cooked.
I follow three agreggators. One is memeordanum.com which greatly titled toward the legacy media. I look at the headlines every day, both there and on my wingnut sites. The legacy media shows every sign of panic. Don’t believe me; start looking at memeordandum and you will see. It takes time to see the trend. I’ve been following that and others for quite some time, and the legacy media are flailing in a major way.
^ This is why the Jan. 6th jihad is failing. The public is heavily discounting what they are pumping out. As a former professional journalist, old school (facts first, then logic rooted in facts), this distresses me quite a bit, to put it mildly. This is right smack out of Aesop, “The Boy Who Cried Wolf.” The day will come when the wolf is really at the door, and no one will believe it.
Well, there’s a pack of wolves swirling about the house now. Waiting for the right time to approach the door.
“Brandenomics” It’s a regression not a recession.
Was that run through the Office of Disinformation Management?
I just keep it grassroots by commenting to people about the changes. I point out that my favorite cereal has gone from $4.50 a box to $7 a box, as well as other examples. Better to plant seeds which can germinate and spread. It is a way to get past their on-board “Biden is good” defense mechanisms. Make them admit that it is affecting them in a negative way.
Would that be Cap’n Crunch, Major?