See what’s clicking on FoxBusiness.com.
Casey Mulligan, former chief economist of the Council of Economic Advisers (CEA), criticized the Biden administration for trying to redefine what a recession is.
Several underlying indicators suggest the U.S. is headed for an economic recession despite President Biden’s insistence that the economy is strong, said Mulligan, who served in the Trump administration from 2018 to 2019. to FOX Business in an interview. In recent days, several senior White House officials have played down the technical definition of a recession and argued that two consecutive quarters of negative gross domestic product (GDP) growth do not indicate a recession.
“It seems to me that the White House is saying, ‘yeah, you’re working harder and earning less, but at least you’re working harder,'” said Mulligan, who is currently a professor at the University of Chicago. this We work to win. This part of earnings is not going well.”
“That’s really what GDP is. GDP combines both income from labor and income from capital, but they tend to move together,” he continued. “We’ve also seen that in the earnings data. Real wages, real earnings have come down quite a bit. in the last month and over the last year.”
WHITE HOUSE SAYS SECOND CONSECUTIVE QUARTER OF NEGATIVE GDP ‘PROBABLY’ INDICATIVE OF RECESSION
US Treasury Secretary Janet Yellen played down recession fears on Sunday, insisting the US economy “is not an economy that is in recession” and said the country is in a period of “transition”. (Justin Tallis/Pool via REUTERS/Reuters Photos)
Biden’s top economic advisers in the White House, Brian Deese and Jared Bernstein, CEA Chair Cecilia Rouse and Treasury Secretary Janet Yellen have thrown cold water on projections that the US economy is entering in recession for the last few days. They pointed to the strong employment growth experienced in recent months and the National Bureau of Economic Research’s definition of a recession.
“Considerable evidence suggests that the economy is not currently in recession, including the persistent strength of the labor market, the expansion of industrial production and alternative estimates of economic growth that suggest a rapid expansion,” wrote two officials at the Treasury Department in a blog post published Monday evening. .
NEW YORK FED Says Americans’ Inflation Expectations Hit New Eleven-Year High in June
The United States has added between 370,000 and 400,000 jobs each month since March after adding 714,000 jobs in February, according to Labor Department data. However, high inflation has reduced workers’ wages and led to a decrease in consumption.
The debate over the definition of a recession is ahead of the Bureau of Economic Analysis’s advanced estimate of second-quarter GDP growth, which will be released later this week. The GDPNow model projected that GDP fell 1.6% in the second quarter, matching the decline in the first quarter and marking the second straight quarter of negative growth, the Federal Reserve Bank of Atlanta said in a report this week past
“It looks like, after the first quarter, there’s going to be a very sharp reduction in productivity like we haven’t seen in a long time, maybe ever,” Mulligan told FOX Business. “We already know this in real wages. But the earning power of people, who work, has really been reduced.”
“I think they’re a little premature in calling victory on job growth,” he added. “In general, when we see a reduction in productivity, we see a loss of jobs. Those job losses could come in the next two to three months.”
SEVERE RECESSION NEEDED TO COOL INFLATION, BANK OF AMERICA ANALYSTS SAYS
Additionally, Michael Strain, director of economic policy studies at the American Enterprise Institute (AEI), noted in a tweet on Monday that a recession was officially declared whenever the economy experienced two consecutive quarters of negative growth of GDP since the fifties.
Mickey Levy, the chief economist for the Americas and Asia at Berenberg Capital Markets and a member of the Manhattan Institute’s Open Market Shadow Committee, said the economy was probably entering a recession of sorts, but still the extent of the fall was unclear.
“Things are clearly weakening, actually weakening into a recessionary environment,” Levy told FOX Business in an interview. “That’s where I think we are now.”
GET THE FOX BUSINESS ANYWHERE CLICK HERE
“I think we’re going into a shallow recession,” he continued. “But the difficulty right now is that it’s developing and we don’t have enough monthly data to support the anecdotal evidence.”