The ‘R’ Word Rears Its Head Despite White House Efforts To Bury It

When economists from conservative think tanks and progressive senators from deep blue states in New England come even close to agreeing about anything, we truly are living in what is known as the Upside Down. So, that’s where we are.Senator Warren of Massachusetts took aim at the Federal Reserve Thursday morning after the commerce department reported that the nation’s gross domestic product contracted 0.2 percent in the second quarter of the year — an annualized rate of 0.9 percent and the second consecutive quarterly decline this year, traditionally an indicator that the nation is in a recession.“The Fed’s aggressive interest-rate hikes risk pushing the U.S. economy into recession — and the evidence is in the data,” Ms. Warren said. “While failing to address many drivers of inflation, the Fed is pumping the brakes on the labor market and slowing the economy.”Also today, there was this from economist Desmond Lachman of the American Enterprise Institute, also saying the Fed needs to back off: “Officially, we are not in a recession,” he said. “But it is too late for the Fed or anyone else to prevent a recession.“The mistake the Fed made was to allow inflation to get too high last year,” Mr. Lachman added. “Once they made that mistake the die was cast for a recession. What they can do, however, is to back off their current hawkishness, which is going to make this recession worse than it need otherwise be.”So there it is: If the day ever comes when the high priests of economics decide that America is in a recession, it was the Fed’s fault — per Ms. Warren — or at least it was the Fed that made it worse, according to Mr. Lachman.The White House was having none of it Thursday, though. No one is to blame because nothing is wrong beyond some “global headwinds” and some inflation that, as the treasury secretary, Janet Yellen, pointed out during a press conference Thursday afternoon, is primarily the role of the Fed to contain.There is no recession, President Biden said at a White House podium. He knows this because the Fed chairman, Jerome Powell, and many other “significant banking personnel” told him so.No, we are not on the cusp of a recession or in one at the moment, the commerce secretary, Gina Raimondo, said on MSNBC. “The economy is clearly slowing,” she said. “And we all knew that would happen.”Ms. Yellen said she wanted to avoid any battles over the “semantics” of the “R” word, but added that it’s “important to get beyond the headline to understand what’s happening.”What’s happening is that job growth remains strong, consumers are still spending, and businesses are relatively healthy, she said. A recession is a broad-based weakening of the economy across multiple sectors, she said, “and that’s not what we are seeing now.”“We are seeing a slowing” of the economy, Ms. Yellen said, “and that’s appropriate and necessary to transition from rapid growth and recovery.” Thursday’s GDP report, she added, “indicates an economy that is transitioning to steady and more sustainable growth.”In reality, the semantics battle decried by Ms. Yellen was started by the White House a week ago with a blog post on the White House website explaining that it’s not technically a recession until the eight economists who make up the Business Cycle Dating Committee at the National Bureau of Economic Research have declared it so. Never mind that for decades the rule of thumb among economists, policy-makers, and journalists has been that two down quarters means recession.The NBER says that most, but not all, of its declared recessions have consisted of two or more consecutive down quarters. In a couple instances, it says, multiple down quarters have been mixed in with a positive quarter that broke up the streak. Each of the last 10 recessions declared by the bureau, however, had at least two down quarters in the mix somewhere.Just not this one, to hear the White House tell it.

The ‘R’ Word Rears Its Head Despite White House Efforts To Bury It

More from the New York Sun

The 82nd Whitney Biennial Masters the Art of Ideological Grandstanding

Trump Formally Names Kevin Warsh To Head Federal Reserve, but Nomination Faces Uncertain Future

The Battle Over Polygamy Begins

Drill, Baby, Drill

Unprecedented Ties Between the American and Israeli Armed Forces Can Hasten Victory in the Iran War

Trump Calls for Jack Smith To ‘Be Brought to Justice’ as Outrage Grows at Surveillance of President’s Aides and GOP Senators

Republicans Back Trump’s Iran Strikes, Multiple Polls Show, Undercutting Fears of a MAGA ‘Civil War’

Spain Denies Any Involvement With America’s Strikes on Iran, Saying Commitment to ‘No War’ Is Absolute