All summer, Republicans claimed the U.S. economy was in a recession because the country’s overall economic growth went negative for the first half of the year.
“Everything about the Biden Recession was predictable — and avoidable,” House Minority Leader Kevin McCarthy proclaimed in July. “Only Democrats in Washington chose not to see it coming.”
McCarthy and others argued that two quarters of negative growth automatically amounted to a recession — even though recessions usually involve mass job loss, not just negative growth. And there’s been nothing but rapid job growth this year.
On Thursday, the Commerce Department announced the economy grew in the third quarter.
The positive growth doesn’t mean there’s no recession lurking around the corner ― but it does mean that if one had already started this year, it was really mild, involved no widespread layoffs, and the unemployment rate remained near historic lows the entire time.
In a statement reacting to the 2.6% increase in gross domestic product, President Joe Biden did a victory lap around his haters.
“For months, doomsayers have been arguing that the U.S. economy is in a recession and congressional Republicans have been rooting for a downturn,” Biden said. “But today we got further evidence that our economic recovery is continuing to power forward.”
It’s true that two consecutive quarters of negative GDP growth are commonly considered by economists to be a recession indicator. And it’s true that a contracting economy is bad.
But declaring a recession has always involved a lot more than one simple data point. The Business Cycle Dating Committee at the National Bureau of Economic Research, a private nonprofit organization, keeps the official score of when recessions start and end.
The NBER calls recessions after the fact, so if one had happened earlier this year, they wouldn’t have said so at the time. But as they explain on their website, they look at much more than just GDP, such as measures of personal income, employment, consumer spending and industrial production. And they even state that “real GDP could decline by relatively small amounts in two consecutive quarters without warranting” a recession call.
Economists said the third-quarter GDP report showed an overall healthy economy, with strong consumer spending and business investment, along with hints of slowing inflation. Republicans still pooh-poohed it.
Rep. Kevin Brady (R-Texas), the top Republican on the Ways and Means Committee, claimed Thursday that “economists have dumbed down economic projections to reflect [Biden’s] struggling policies.”
And Brady said the GDP report was not actually positive.
“A major surge in exports and government spending produced a fleeting positive number ― ‘ghost growth’ ― while the key drivers of the economy such as investment and consumer spending shrunk again,” Brady said.
Rep. Don Beyer (D-Va.), chair of the Joint Economic Committee, said the Commerce Department’s Bureau of Economic Analysis, which produces the GDP numbers, is staffed by conscientious career economists, not a bunch of Democrats. He said it was unfortunate Republicans continuously denigrate institutions.
“This goes along with, ‘You can’t trust the FBI. You can’t trust [the Department of] Justice, the IRS is out to screw you.’ The whole thought of not trusting the institutions that make our country the best in the world,” Beyer told HuffPost.
Rep. Jason Smith (R-Mo.), the top Republican on the Budget Committee, said it could still turn out a recession is upon us.
“In the recession of 2007-2009, America saw a negative quarter of GDP followed by a brief uptick before subsequent quarters of negative growth,” Smith said Thursday.
It’s entirely possible that the economy will enter a recession within the next year as the Federal Reserve raises interest rates, slowing the entire economy in an effort to slow inflation. The Fed has projected that unemployment could rise significantly in 2023.
What’s odd about the Republicans insisting on a recession now is that the American people are plenty upset about the economy because of high inflation that has shown no sign of abating — and it’s giving Republicans an advantage in the upcoming midterm elections. Even without a recession, the economy has been a drag for Democrats.