The CEA said that determinations of recessions and the assessment of economic activity rely on data holistically. The National Bureau of Economic Research defines a recession as a significant decline in economic activity that lasts more than a few months.
The US Council of Economic Advisers (CEA) redefined the meaning of recession, supposedly to prevent the economy from collapsing too soon.
According to the GDP data released at the end of the week, there was a second quarter of negative growth. However, the Biden administration will probably not think it is a recession.
The agency said they could not continue defining an economic recession by two consecutive quarters of declining real growth.
They said that official determinations of recessions and assessment of economic activity rely on data holistically. Among them are the labor market, consumer and business spending, industrial production, and income.
The Council of Economic Advisers considers that the drop in GDP in the first and second quarters of 2022 indicates a recession.
Before a Busy Week, Crypto Markets Cool Off
The US economic output contracted at an annual rate of 1.6% in the first quarter of 2022. According to economists, that figure may reflect a gain of just 0.4% in the new report on the second quarter.
Crypto markets recently dropped sharply on Monday, with Bitcoin (BTC) and Ether (ETH) falling by 3.7% and 7.5%, cooling off after a significant rally.
The drop seems to precede a busy week in global financial markets, starting with the Federal Open Market Committee meeting. There will also be a release of relevant corporate earnings and a report on the second quarter GDP.
The Federal Reserve (Fed) might raise interest rates by 75 basis points to combat US inflation, which reached 9.1% in June. All these factors might cause volatility in global and crypto markets.
Janet Yellen Says There Is No Economic Recession in the US
Janet Yellen, US Treasury Secretary, said the economic growth is slowing, although a strong job market and consumer spending showed no recession. However, the official did not rule out the risk of a collapse of the economy in the future.
Yellen stated that this is not a recession economy but a transition period in which growth is slowing down.
She agrees with the Council of Economic Advisers that recession is a broad weakness of the economy.
In the second quarter of 2022, the US economy created 1.1 million new jobs, equivalent to around 375,000 jobs per month. That is three times more new jobs than any quarter preceding a recession.
The US Council of Economic Advisers Recession as a Lie
According to the National Bureau of Economic Research, a recession is a significant decline in economic activity. They explained that it spreads throughout the economy and lasts more than a few months.
The agency usually tracks several variables, including personal income, jobs, consumer spending, and industrial production.
American journalist Jacqui Heinrich brought to light the CEA definition in response to a Twitter user. She stated that recession has one meaning: two consecutive quarters of negative growth. Heinrich highlighted that the Biden administration is redefining the word as a lie.
By Alexander Salazar
