It Doesn't Matter If We Are In A Recession
Why whether or not we are in a recession matters, and why semantics is the last thing we need
Today I woke up, poured some coffee, and decided to start my day off in the worst way possible and instead of doing fun things like looking at sports scores (go Cubs) or making breakfast, I decided to look at the news. I was greeted with this headline:
“US Economy Enters Technical Recession After Growth Tumbles 0.9% In The Second Quarter”1
Now I knew the economy was bad because of well, my gas tank, but my first thought was “Wow. That’s bad.”. Technically speaking now, we are in a recession. Again, recession is bad (for obvious reasons), but are we actually in one? According to Seema Shah of Principal Global Investors, "While two consecutive quarters of negative growth is technically a recession, other timelier economic data are not consistent with recession."2. So maybe we aren’t. That coupled with the stock market going upward makes it seem maybe the economy isn’t so bad, maybe there are just some markets tanking our GDP. And then I go to 76. And to get milk. Or burger buns for dinner last night. Next thing I know I spent 10 bucks at the grocery store getting some burger buns and a gallon of milk, something that would not have been so expensive just a year ago.
The economy hurts my brain sometimes.
And as everything in life, it is becoming heavily politicized. Conservative news website The Daily Wire released this article with the following headline:
“‘Doesn’t Sound Like A Recession To Me’: Joe Biden Downplays Economic Woes As U.S. Enters Recession3”
The article used the traditional definition of “recession” (two straight quarters of negative growth), and quoted President Biden as saying: “That doesn’t sound like a recession to me,”4, and starting the article off with “President Joe Biden suggested that the U.S. economy was not in a recession Thursday despite new economic data showing that the U.S. has entered a recession.”5.
The Left is doing the opposite. They are trying to downplay fears of a recession, with Vox posting the following headline:
“GDP declined again — but that might not mean we’re in a recession”6
The article proceeds to make the argument that while GDP growth is slowing, other economic indicators are still strong, such as unemployment. The article states this: “several indicators that underscore the health of the labor market: the unemployment rate stands at 3.6 percent, just slightly above its level before the pandemic, which was at a 50-year low.”7.
So everyone seems to disagree on whether or not we are in a recession, but really at the end of the day what we are in doesn’t matter. Janet Yellen, Biden’s Treasury Secretary, “said on Thursday that a semantics debate over whether or not the U.S. economy is in a recession should be avoided as households grapple with inflation and high gas prices.”8. And as much as I disagree with Yellen’s economic policy, I agree with her on this one. Regardless of what any official indicator of the economy says, Americans are struggling. Whether the GDP growth rate is 5000% or 0%, it is all the same if Americans are having financial woes.
The AAA reports that gas prices are at a national average of $4.278 as of today (July 28th)9. This time last year it was $3.136 per gallon10. That is over a dollar increase in just one year. While albeit it is falling from its high in recent months, it is still causing everyday Americans to struggle. This report from the Bureau of Labor Statistics just about sums it up:
“Prices for food increased 10.4 percent for the 12 months ending June 2022, the largest increase since February 1981. Prices for food at home rose 12.2 percent over the last 12 months, the largest increase since April 1979. Prices for food away from home rose 7.7 percent, the largest 12-month change since November 1981.
Energy prices rose 41.6 percent over the last year, the largest 12-month increase since April 1980. Within the energy category, motor fuel prices (which includes all types of gasoline) increased 60.2 percent over the year. Gasoline prices increased 59.9 percent, the largest 12-month increase since March 1980. Electricity prices rose 13.7 percent, the largest 12-month increase since April 2006. Natural gas (piped utility gas) prices increased 38.4 percent over the 12 months ended June 2022, the largest increase since October 2005.”11
In short: Americans are struggling.
According to Forbes, wages only grew an average of 3.4% to go along with these prices12. Inflation is over nine percent. None of this bodes well for us everyday Americans, the ones that aren’t rich off of lobbying deals or throwing a baseball very fast. What we really need to focus on, both the political class and the working class, is trying to lower inflation and prices.
Semantic games of whether we are in a recession or not are not helping the cause. What does help the cause is legislation that will actually help with costs and gas. Constantly pumping money into the economy like the Biden Administration is doing is not going to help anyone. But doing nothing is just going to cause more economic pain for Americans. What also doesn’t help is blaming the issues on others. It doesn’t matter who started the inflation and economic issues, what matters now is fixing them.
When the country is hurting across the board like it is right now, the Left and the Right playing semantics just won’t solve the problem, it is like trying to decide whether you are being attacked by a Brown Bear or a Grizzly as it rips your arm off, there’s no point. When the country is being plagued by inflation, pumping more money won’t help us get out of it. What we really need right now to get out of this time of economic hardship, is to instead change course and enact policies that helped us get out of other times of economic hardship. Whether or not we are in a recession is irrelevant, what matters is we are hurting.
Please feel free to share your thoughts on this by leaving a comment below. Economics is complicated, and everyone has a different view, and I would love to hear yours.
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Henney, Megan. 2022. “US Economy Enters Technical Recession after Growth Tumbles 0.9% in the Second Quarter.” FOXBusiness. July 28, 2022. https://www.foxbusiness.com/economy/us-economy-shrank-second-quarter-entering-technical-recession.
Ibid.
“‘Doesn’t Sound like a Recession to Me’: Joe Biden Downplays Economic Woes as U.S. Enters Recession.” n.d. The Daily Wire. Accessed July 28, 2022. https://www.dailywire.com/news/doesnt-sound-like-a-recession-to-me-joe-biden-downplays-economic-woes-as-u-s-enters-recession.
Ibid.
Ibid.
Ngo, Madeleine. 2022. “GDP Declined Again — but That Might Not Mean We’re in a Recession.” Vox. July 28, 2022. https://www.vox.com/2022/7/28/23282473/gdp-recession-economy.
Ibid.
Brown, Courtenay. 2022. “Yellen: We Should Avoid Recession ‘Semantic Battle.’” Axios. July 28, 2022. https://www.axios.com/2022/07/28/yellen-recession-economy.
“AAA Gas Prices.” n.d. AAA Gas Prices. https://gasprices.aaa.com.
“Weekly U.S. Regular All Formulations Retail Gasoline Prices (Dollars per Gallon).” n.d. Www.eia.gov. https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EMM_EPMR_PTE_NUS_DPG&f=W.
“Consumer Prices up 9.1 Percent over the Year Ended June 2022, Largest Increase in 40 Years : The Economics Daily: U.S. Bureau of Labor Statistics.” n.d. Www.bls.gov. https://www.bls.gov/opub/ted/2022/consumer-prices-up-9-1-percent-over-the-year-ended-june-2022-largest-increase-in-40-years.htm.
Bremen, John M. n.d. “Why Salary Increases Do Not Keep Pace with Inflation.” Forbes. Accessed July 28, 2022. https://www.forbes.com/sites/johnbremen/2022/04/07/why-salary-increases-do-not-keep-pace-with-inflation/#:~:text=Yet%20a%20survey%20of%20U.S..