On January 21, 2008, the first day of the final year of George W. Bush’s presidency, the Associated Press predicted a recession just as the presidential election was heating up. The story defined recession “as an outright contraction of economic activity and employment lasting at least six months.”
In June 2019, as another heated presidential race was just getting underway, Politico reported “Manufacturing as measured by the Federal Reserve has declined for two straight quarters, the technical definition of recession.”
In 2008, the AP got it right. In 2019, Politico got it wrong because it had manipulated the definition of a recession to fit a political purpose. A recession is not the decline of manufacturing but of all economic output. The United States was not in a recession that year.
So, it’s puzzling why both of those journalistic enterprises suddenly want to remind their readers that the technical definition of a recession is not the only definition or even the true one.
Politico reported on Wednesday that the White House is preparing for an economic slowdown, noting how the U.S. economy has shrunk for the second quarter in a row—“a classic—though by no means the only—definition of a recession.”
The AP went further, devoting an entire story to why the literal definition of recession doesn’t really mean the economy is in a recession. But the story’s lead got it right: “By one common definition, the U.S. economy is on the cusp of a recession. Yet that definition isn’t the one that counts.”
It’s true. What economists and other experts define as recession doesn’t matter at the ballot box. As Harry Truman once quipped, “it’s a recession when your neighbor loses his job; it’s a depression when you lose yours.” The people’s pocketbooks are what count, and those aren’t looking so good right now. Rising inflation is bad enough news for the Democrats. If unemployment begins to rise again, there will be a tsunami in November.
No patriotic American should want this.
The White House seems to think the problem is the message, not the economic reality. Both Politico and the Associated Press stories mention the White House’s spin on the narrative to downplay the r-word and inflation as liabilities for the Democrats.
The reality is, what journalists write won’t have an effect at the ballot box. The only effect will be further loss of credibility with Americans who are already suspicious of them. And if the administration keeps avoiding the admission of reality, it too will further erode its credibility.
To tell Americans the economy is doing well, and that they should not believe their own lying eyes (and lighter wallets), will only anger hard-working people more and encourage them to punish Joe Biden and his party.
As a candidate, Biden promised to be honest and forthright with Americans. He has an opportunity to prove that he meant it. He needs to level with the country about the economy, worry less about his sagging poll numbers, and focus on solutions. Fact is, the problem is largely the Democrats’ own making due to excessive spending and regulations that are breaking the backs of U.S. producers, employers, and consumers.
On the other hand, journalists should remember their job is to tell the truth, not act as stenographers for the White House communications office.
Stagflation is the toxic combination of recession and inflation, a phenomenon last seen in the United States in the 1970s. Bad policy makes for a bad economy. Good policy can help the economy flourish.
During the last stagflation, presidential candidate Ronald Reagan recalled Harry Truman’s line and gave it his own twist: “Recession is when your neighbor loses his job. Depression is when you lose yours. And recovery is when Jimmy Carter loses his.”
If Biden follows Carter’s lead, he will end up suffering the same electoral fate. And if the administration and their amen corner in the Washington press corps continue to insist that the economy is just fine, they will annihilate what little credibility they have left.