Official vs Unofficial Recession
Are we in a recession? That depends on who you ask. Unofficially, a recession is commonly defined as two consecutive quarters of economic decline.
The Commerce department said Gross Domestic Product declined .9 percent in the second quarter. Economists had expected the economy to expand .5 percent. GDP decline 1.6 percent in the first quarter of the year. So, unofficially, we are in a recession.1
But a recession is officially declared by the National Bureau of Economic Research (NBER). They have not declared a recession yet. The NBER looks at several factors to make their decision. These factors include negative economic growth, rising unemployment, falling income, and slowing retail sales.
Don’t bother checking Wikipedia to find out. They blocked new users from editing its recession page. People kept changing the definition of recession. The page was edited more than 180 times in a week. Before that week, the page had just 24 revisions in 2022. The page now has a lock on it.
Wikipedia editors were accused of trying to change the page to help President Biden. Biden had rejected the idea that the US is in a recession. He cited job growth, low unemployment, and growing investment. “That doesn’t sound like a recession to me,” he said.2
Biden Denies Recession
The Biden administration based their denial on the NBER definition of recession. NBER defines a recession as a “significant decline in economic activity that is spread across the economy and that lasts more than a few months.” Government officials said we are not in a recession because the labor market is strong. The jobless rate in June was 3.6 percent for the fourth month in a row. Treasury Secretary Janet Yellen said there isn’t a recession because we’re creating “400,000 jobs a month.”3
The shrinking economy will not deter Chairman Powell from raising interest rates. “I do not think the U.S. is currently in a recession, and the reason is there are too many areas of the economy that are performing too well,” Powell said. “This is a very strong labor market. It doesn’t make sense that the economy would be in a recession with this kind of thing happening.”4
Changing Definitions Doesn’t Change Facts
Conservative groups slammed Biden for trying to gaslight Americans. Will Hild is the Executive Director of Consumer Research. He said, “Regardless of how the White House tries to spin it, the Biden recession is here to stay as everyday Americans are facing higher prices from the grocery store to the gas pump.” Jessica Anderson of the Heritage Action for America also commented. “No matter how the Biden administration attempts to gaslight the American people or redefine the term ‘recession,’ we all feel the inflationary effects of his economic policies in our wallets.”5
Even Biden allies are expressing concern. NYC Mayor Eric Adams said, “We are in a financial crisis like you can never imagine.” He added, “Wall Street is collapsing; we are in a recession.” Vice President Kamala Harris admitted “inflation is too high” and “our economy is slowing down” during her NYC visit.6
Economist Peter Schiff predicted the US is heading for massive layoffs. “The Dems claim that we’re not in a #recession because unemployment is still low,” Schiff tweeted. “But weekly jobless claims continue to rise and mass layoffs are coming. In the meantime, even though most workers still have their jobs, they’ve all suffered huge pay cuts as a result of #inflation.” US inflation has been outpacing wage increases for more than a year. Schiff added, “I think there are going to be layoffs.”7
Schiff predicts a dark future for the economy. “This is going to be a brutal recession,” he said. “I think it’s going to be more of a depression by the time it’s over.” Official or not, the economy is in a downturn. Fortunately, you can protect your retirement funds with safe haven assets. Contact us today to learn how a Gold IRA can recession proof your investments.