STORY OF THE WEEK: The U.S. economy shrank for the second consecutive quarter, meeting the common definition of an economy in recession.
Two consecutive quarters of GDP contraction is the common definition of"recession." When a White House blog post last week argued that the common definition is “neither the official definition" of recession"nor the way economists evaluate the state of the business cycle," the administration was and save face amid economic woes.
Several voices in the Biden administration have argued that the U.S. economy remains relatively strong despite inflation, pointing to wage growth and low unemployment. In a recent interview, Treasury Secretary Janet Yellen acknowledged that the U.S. economy is slowing but that"this is not an economy that is in recession," and said the decline isn't"a broad-based contraction that affects many sectors of the economy.
Perspectives on whether the U.S. is in a recession often fall along partisan lines, though many voices, especially on the right, argue that two consecutive quarters of GDP contraction constitutes a recession. Some on the left frame that definition as unofficial, and point to the NBER definition while highlighting that the group wouldn't issue any declaration on a recession for at least a few months.
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