New York Times columnist and economist Paul Krugman insists the United States is not in a recession, that the term is essentially meaningless, and current efforts to apply the label to the U.S. economy amount to "vitriolic" partisanship.
Krugman made the remarks in an interview on CNN's "Reliable Sources" program that aired on July 31, days after the U.S. economy met the rule-of-thumb definition for a recession, with GDP coming in negative for two quarters in a row.
Host Brian Stelter kicked off the segment by asking Krugman whether the United States is in a recession and whether the term "recession" even matters.
“No, we aren’t, and no, it doesn’t,” Krugman replied.
“None of the usual criteria that real experts use says we’re in a recession right now,” Krugman continued.
Recession?Debate has swirled around whether the U.S. economy has fallen into a recession after a 0.9 percent contraction in the second-quarter GDP, which followed a 1.6 percent decline in the first quarter.
Two negative back-to-back quarterly GDP prints are a common practical definition for a recession, according to numerous experts and economists.
Formally, however, recessions in the United States are declared by a committee of economists at the National Bureau of Economic Research (NBER), who use a broader definition than the two-quarter rule that considers a range of indicators—including employment—which has continued to grow.
The Biden administration has seized on the NBER's criteria for declaring a downturn, insisting the economy isn't in a recession.
“That is not what we’re seeing right now when you look at the economy. Job creation is continuing, household finances remain strong, consumers are spending, and businesses are growing,” Yellen said.
'We're in a Recession. Full Stop'Asked whether he accepts the Biden administration's insistence that the country hasn't yet slipped into a recession, Jim Bianco, founder of Bianco Research, told the Real Vision Finance program in a recent interview that, while it may be "shallow," it's a recession.
"Let me try and be clear here. Yes, we're in a recession. Full stop, question over—a recession," Bianco said.
Bianco said it may be reasonable to call the recession "shallow," though he warned that the downturn could soon get ugly.
"Sure, alright, it's a shallow recession. Check back Jan. 1 and let's see if it's still a shallow recession," he added, while arguing that what the White House is doing with its messaging on the economic slowdown is nothing new.
Bianco spoke of White House pushback during the Carter administration in the late 1970s against economists warning that soaring inflation could lead to a depression. Out of that controversy, the word "recession" was born as a softer way to refer to an economic slump, Bianco said, adding that current administration efforts to deny that the economy is in a recession amount to more of the same.
"We used to call them depressions. In the 1930s, the Hoover administration went crazy because we used to call them 'panics,'" Bianco said.
"Don't call it a 'panic,' what we're seeing, so they invented the word depression. So we went from 'panic' ... the White House didn't like that word, so we invented the word 'depression.' Then in 1978 they didn't like the word 'depression' so we invented the word 'recession.'"
'Especially Vitriolic'In the CNN interview with Krugman, Stelter suggested that the debate between whether the economy is in a recession or not basically amounts to the White House following a time-worn strategy to downplay bad economic data while the administration's political opponents do the opposite.
Replying, Krugman said that efforts to call the current slowdown a recession fall into a different category than standard debates.
“I would say that this is especially vitriolic,” Krugman asserted.
“I’ve been in this business for a couple of decades, and I get lots of hate mail and see stuff. I’ve never seen anything as bad as this. The determination of a lot of people to say it’s a recession is above and beyond anything I’ve ever seen,” he continued.
Asked what he thinks is driving this, Krugman chalked it up to partisan divisions.
“It’s partisanship. People want it. It’s the 'Biden recession.' They want their Biden recession. They’re going to have it, never mind the fact that … it’s not a recession in any technical sense,” he added.
Krugman's remarks were met with a critical response by some prominent voices on Twitter.
'Deja Vu'British broadcaster Piers Morgan posted a message on Twitter saying that "[i]f Trump was still President, Krugman would definitely be saying it’s a recession," suggesting that partisan spin around economic performance cuts both ways.
Krugman, who earlier predicted that the current inflationary wave would be a short-lived "transitory" phenomenon, admitted in the interview on CNN that he was "wrong about inflation," which has remained stubbornly high in the United States and in June hit a 40-plus year high of 9.1 percent.
"This kind of noise in the data explains why the NBER doesn't rush to make recession calls, and relies on multiple indicators, not just GDP," he continued.
'Inflationary Depression'By contrast, economist and investor Peter Schiff, founder of Euro Pacific Capital, told The Epoch Times in an earlier interview that he believes the United States is slumping into an “inflationary depression.”
“I think that the economic weakness is going to be so pronounced and over such a long period of time that it would not even do it justice to call a recession,” he said. “I think depression is going to be a more accurate description of what we’re going to go through.”
Schiff argued that the United States will spend most of this decade in a state of depression while, at the same time, “prices are going to rise much more in this decade than they did in the 1970s.”