Gross domestic product, adjusted for inflation, fell 0.2 percent in the second quarter, after a first quarter drop of 1.6 percent, the equivalent of an 0.9 percent annual rate of decline, the Commerce Department reported Thursday.
The decline that the Commerce Department reported Thursday in the gross domestic product — the broadest gauge of the economy — followed a 1.6% annual drop from January through March. Consecutive quarters of falling GDP constitute the longstanding definition of a recession.
The Biden White House saw this bad news coming and earlier this week deployed economic advisor Brian Deese to try to redefine recession in a presser where he claimed “two negative quarters of GDP growth is not the technical definition of recession.”
“It’s not the definition that economists have traditionally relied on,” President Biden’s economic adviser said, making a guest appearance at a White House briefing, reported by the New York Post.
But on Wednesday, resurfaced 2008 comments from Deese revealed that he used to believe that was the “technical definition” or recession.
“Economists have a technical definition of recession, which is two consecutive quarters of negative growth,” Deese said at the time, according to RNC Research.
So, two quarters of negative growth are only a recession when a Republican occupies the White House – got it.
However, non-political economists, such as Mohamed A. El-Erian, President of Queens' College, Cambridge University, and a Bloomberg and Financial Times columnist see things differently. As Prof. El-Erian tweeted:
Message is clear from the negative US GDP print (-0.9%) and unfavorable miss on jobless claims:
The US #economy is slowing at a significant rate.
Add to that the 8.7% price change in today's data and the bottom line is clear:
Deepening stagflation and flashing red #recession risk
And, looking at Biden’s policies and the administration’s response to the latest economic news our friends at Americans for Limited Government were even more pessimistic than was Prof. El-Erian. In a news release shared with CHQ ALG president Rick Manning said:
“The United States economy is officially in a recession with the past two quarters contraction being reported by the Department of Commerce’s Bureau of Economic Analysis. Most Americans already knew that the economy was in trouble due to the forty-year high inflation that has bloomed due to unnecessary federal government spending splurges since December of 2020, intractable supply chain issues that are exacerbated by a Transportation Secretary, Pete Buttigieg, who is more interested in his next hoped for job than the one he currently holds, and U.S. based multinationals obstinate insistence in having their supply chains dependent upon the Chinese Communist Party rulers of mainland China.
“Joe Biden and his apologists will try to blame everyone from Putin to businesses for this economic contraction, but the ugly truth is that recession was the only possible outcome of his fundamental transformation policies which are putting a regulatory chokehold on domestic production. Democrats used to depend upon blue collar workers and the unions that represent them for their electoral success, and Joe Biden might be the last Democrat presidential candidate elected who outwardly appealed to workers in hard hats. Unfortunately, his administration’s determination to sentence America to global dependency, most notably but not only in the energy sector, is an economic death sentence to much of middle-class America.
“The Biden administration’s determination to outsource all environmental risk is guaranteed to outsource all of the jobs that come with that risk. Joe Biden argues that there cannot be a recession without job losses. What will he say when the full impact of his policies trickle down to workers later this year when the unemployment lines are the only things that are growing. I hope this does not happen, but it is the inevitable consequence of an administration at war with the engine of the American economy.”
The signs of the “stagflation” Prof. El-Erian surmised is on the horizon are unmistakable. As Bloomberg's Olivia Rockeman reported earlier this month, US inflation roared again to a fresh four-decade high last month, likely strengthening the Federal Reserve’s resolve to aggressively raise interest rates that risks upending the economic expansion.
The consumer price index rose 9.1% from a year earlier in a broad-based advance, the largest gain since the end of 1981, Labor Department data showed Wednesday. The widely followed inflation gauge increased 1.3% from a month earlier, the most since 2005, reflecting higher gasoline, shelter and food costs.
One would think that with inflation rising and the economy in recession Democrats would be reexamining their policies and looking for ways to get the economy growing its way out of the recession spiral, but that’s not how Democrats roll.
Instead of pro-growth policies, such as cutting job-killing regulations and taxes, Democrats announced – you guessed it – more spending and regulations to further drive-up inflation. Elitist Democrats, always immune to the real day-to-day impact of their economic follies, are on a path to reestablish the economic disaster of Jimmy Carter’s stagflation. Nothing but turning Democrats out of office in November’s midterm election will save much of middle-class America from the economic death sentence Democrats are intent upon imposing on them.