🇺🇸 The Recession Question

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📉 President Biden Job Approval: Approve 39, Disapprove 56 (USA Today/Suffolk)

🐴 Generic Congressional Vote: Republicans 40, Democrats 44 (USA Today/Suffolk)

📉 Direction of Country: Right Track 15, Wrong Track 76 (USA Today/Suffolk)

TRENDING

Right: Biden says US not in a recession despite two consecutive quarters of shrinking economy (Fox Business)

Right: McConnell caught flat-footed with surprise Schumer-Manchin deal (Washington Examiner)

Right: DOJ May Have Obstructed Important Biden Corruption Investigations Out Of Pittsburgh And Delaware (The Federalist)

Left: 'Fox & Friends' Tries To Comfort Trump After Reporting Very Bad Poll Numbers (Huffington Post)

Left: Maricopa County leaders keep pushing back against election denialism in Arizona (NPR)

Left: In the GOP’s New Surveillance State, Everyone’s a Snitch (Mother Jones)

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US: Congress passes bill boosting US semiconductor production (CNN)

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ECONOMY

The Recession Question

Yesterday the US Bureau of Economic Analysis announced the GDP fell 0.9% in the second-quarter, marking the second straight quarterly decline. Some economists and market observers define that as a recession.

News Coverage from the Left: US economy just had a 2nd quarter of negative growth. Is it in a recession? (NPR)

News Coverage from the Right: Politico says GDP report predicting a recession could be 'possibly inaccurate' (Fox News)

From The Flag: Meanwhile the White House says the more accurate call on a recession would come from the National Bureau of Economic Research, a private nonprofit organization. Just over two weeks ago we examined inflation’s impact on the economy. Here’s commentary from both sides concerning the recession question.

RIGHT-LEANING SENTIMENT

The White House Plays Word Games While the Economy Sputters

• Rather than sticking to the established definition of a recession the Biden administration is pointing to other data points in an attempt to deflect.

• While the White House is using verbal gymnastics to play politics, voters already feel we’re in a recession.

• The current state of the economy is a reminder that the Fed is an extension of the government and serves its interests first and foremost.

“​​A Recession by Any Other Name” Phillip W. Magness, Wall Street Journal Op-ed: “Economists have long defined a recession as ‘a period in which real GDP declines for at least two consecutive quarters,’ to quote the popular economics textbook by Nobel laureates Paul Samuelson and William Nordhaus. This definition isn’t perfect, but it describes almost every downturn since World War II. … In place of the standard economic definition of a recession, administration officials point to the business-cycle dating committee of the National Bureau of Economic Research as the ‘official recession scorekeeper.’ It’s a highly convenient move for them. While the nonpartisan NBER employs a robust set of indicators to pinpoint recessions, it does so retrospectively. The great recession of 2007-09, for example, had already been under way for a year before the NBER released its determination. Sometimes recessions end by the time NBER classifies them, and this built-in delay limits the utility of NBER scorekeeping for real-time policy decisions.”

“Voters already believe we’re in recession” David Winston, Roll Call Opinion: “Over the past couple of weeks, in a vain attempt to reframe the definition of a recession, Team Biden has added yet another new word, ‘technically,’ to their expanding in-house economic dictionary. We’ve seen this movie before with earlier efforts to downplay rising inflation numbers through words like ‘transitory’ … It didn’t work. … When asked Monday about the potential for a recession, the president offered, ‘My hope is we go from this rapid growth to a steady growth. … Trying to play rhetorical games with the state of the American economy rings hollow for voters, many of whom see it as the act of a desperate administration. … Simply put, weasel words don’t work. Neither does bad economic policy, no matter how many complicit economists you dig up. The problem the White House and Democrats on the Hill now face in their effort to redefine what makes a recession is that voters believe we’re already there.”

One more opinion piece from the Right: The Church of the Federal Reserve is Here to Save Us Monty Pelerin, American Thinker

LEFT-LEANING SENTIMENT

Politics Aside, the Fed May Need to Engineer a Recession

• The rush to declare a recession is rooted in politics and downplays the complexity of market-based economics.

• Inflation is entrenched and the Fed needs to cause “pain” in the form of a recession to get rising prices under control, just like the 70s and 80s.

• Reporting on a recession and describing its impact is difficult because it may result in a less aggressive Fed, which could help the stock market.

“Recession: What Does It Mean?” Paul Krugman, New York Times Opinion: “... there will be a lot of breathless commentary to the effect that we’re officially in a recession. But we won’t be. That’s not how recessions are defined; more important, it’s not how they should be defined. … Two quarters of economic contraction — a downturn sustained enough that it probably isn’t a statistical blip — seems, on the surface, like a reasonable criterion. But it’s not hard to see how it could be deeply misleading, even if the data are correct. Imagine, for example, an economy that suffered a severe slump for one quarter, then briefly stabilized and grew a bit, then resumed its plunge for another quarter. Would you really want to deny that this economy experienced a recession? … And what difference would a recession call make, anyway? What should matter is the state of the economy — which is complicated — not the particular word we use to describe it.”

“This kind of shock to the economy will have consequences” Zachary B. Wolf, CNN: “Americans today need to realize that efforts to tame runaway inflation, while arguably necessary, have real consequences that can hurt. … We're talking here about the late '70s and early '80s, when high inflation got so baked into the American psyche that killing it took a shock to the system -- leading to everyday interest rates on par with what credit cards charge today. The medicine to cure inflation kicked off a double-dip recession -- where a recession was followed by a brief recovery and then another recession -- and put millions of Americans out of work. The architect of that shock, former Federal Reserve Chairman Paul Volcker, is today hailed for doing the politically hard thing and creating the environment for decades of subsequent economic growth. But he weathered criticism as the inflation died down.”

One more opinion piece from the Left: Is the US in Recession? Jeffrey Frankel, Project Syndicate

FLAG THIS

Over Half of Americans Say We’re in a Recession

In June the number of Americans who said the economy is in a recession went above 50% for the first time.

As of earlier this month, the number had climbed to 58%, with 21% saying we are not in a recession, and 20% unsure (Investor’s Business Daily/TIPP).

FLAG FINDS

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