White House redefines recession to avoid it
To avoid a recession, policymakers have altered the standard definition of a recession.
According to a recent White House blog post, the standard definition of an economic recession as “two consecutive quarters of declining real growth” is no longer applicable.
As the global financial environment worsens, the present government will no longer refer to the following US GDP data, which are most anticipated to show the second quarter of negative growth as a recession.
According to the President’s Council of Economic Advisers, the traditional definition will no longer be applicable, with the government agency stating in advance:
“Instead, both official judgments of recessions and analysts’ evaluations of economic activity are based on a comprehensive analysis of the data, which includes the labour market, consumer and corporate spending, industrial output, and earnings. The GDP loss in the first quarter of this year is unlikely to suggest a recession, even if it is followed by another GDP fall in the second quarter.
The statistics don’t lie
During the first three months of 2022, the overall production of the American economy decreased by 1.6%. According to analysts, when the government announces new statistics for Q2 on Thursday, this number is expected to increase by a meagre 0.4%.
In response to the announcement, the value of all cryptocurrencies plunged substantially, with Bitcoin and Ethereum falling almost 4 percent and 7.5 percent, respectively.
The drop also predates the July 27 Federal Open Market Committee’s forthcoming meeting announcement. In addition, the earnings records of various companies for the second quarter are expected, making the next few days particularly intriguing.
Lastly, the Fed is anticipated to increase interest rates by 75 basis points shortly to combat inflationary pressures. The current inflation rate is 9.1 percent, the highest over four decades.