I am awakened to a news alert, “The United States officially enters a recession, data indicates two consecutive quarters of negative real GDP growth” it reads. I glance at my clock and decide I deserve another hour, I awaken again to another alert, this time informing me that the Biden administration disputes whether or not the U.S. is in a recession; puzzled I do more research. Typically, the White House contends that recessions involve an increase in the unemployment rate, which has not occurred, ergo there is no recession. This reasoning, however, seems more political than rooted in widely accepted principles of economics, opening serious concerns regarding the perspectives of politicians today.
A favorite quote of mine, coming from former Press Secretary Bill Moyers and also cited in a previous piece, “The Downfall of the American Way,” reads, “We seem to prefer a comfortable lie to the uncomfortable truth.” Notably, the current state of affairs keeps returning to this phenomenon, before it was Republicans downplaying COVID, and now it is Democrats downplaying the economic situation. It should not and cannot be the mindset of a prosperous and free country to believe what “just ain’t so,” as Mark Twain put it, to feel at ease. If those entrusted to lead this nation cannot even agree about the existence of a crisis, how can they be trusted to end it?
While it is true that the National Bureau of Economic Research (NBER) holds that it “…takes account of a number of monthly indicators — such as employment, personal income, and industrial production — as well as quarterly GDP growth,” even NBER concedes, “We view real GDP as the single best measure of aggregate economic activity.” With two consecutive quarters of negative economic growth, whatever one seeks to name it, there should be a clear message that this is alarming.
In an economically tense environment, not only on a national, but also global scale, action must be taken by elected officials; action other than downplaying a serious economic slowdown. To ease inflation, the Federal Reserve has been selling bonds and focusing heavily on increasing interest rates, but while that is really all the Federal Reserve can do, it is not all that can be done. Classes like AP Macroeconomics reason that inflationary environments can be attacked with the sale of bonds and an increase of interest rates from the Fed, and from Congress, a decrease in spending and/or an increase in taxes. Congress and the White House need to consider courses of action that go beyond the recent reconciliation bill Senator Manchin came out in support of. While that bill does tackle the deficit, it does so with only about half of the revenue it seeks to raise. What Congress and the White House need to stop doing is what they have all become quite good at: playing politics.