Biden's Recession Hits U.S. as GDP Shrinks and White House Fights Over Data

President Joe Biden may have spent the week trying to persuade Americans that the nation is not in a recession, but Thursday's long-awaited gross domestic product (GDP) report showed the economy shrank for a second consecutive quarter.

The latest data from the Commerce Department revealed that GDP—which measures the total output of goods and services in the U.S.—declined again this year, at a 0.9 percent annualized pace for April through June. The first quarter's decline was 1.6 percent.

Not every recession follows two full quarters of negative growth (1947 saw the U.S. economy shrink on that basis but without going into a recession). Still, the consecutive-quarter contraction is a typical telltale sign that a recession is coming, and it is often used to define one.

The official declaration of a recession is made by the National Bureau of Economic Research, which defines it as "a significant decline in economic activity that is spread across the economy and that lasts more than a few months." But the NBER often doesn't make the call until many months later.

United States enters recession
Newsweek/Statista

The technical details of what constitutes a recession are what the Biden administration latched on to in its efforts to pre-spin Thursday's data. It has strictly adhered to a currently unmade call from the NBER in arguing against those who have already declared a recession based on the second-quarter GDP decline.

Government officials have continued to reject the claim that a recession is simply "two consecutive quarters of GDP contraction" and have laboriously tried to explain the NBER's criteria.

"Recession probabilities are never zero, but trends in the data through the first half of this year used to determine a recession are not indicating a downturn," the White House wrote in a blog post last week.

Last Sunday, Treasury Secretary Janet Yellen told Meet the Press that the nation's economic conditions are unique and that it's "not a recession" when you're "creating almost 400,000 jobs a month."

Biden Gets Recession, GDP Slump Shows
Thursday's gross domestic product report showed the U.S. economy shrank for a second consecutive quarter, furthering fears that the nation is heading into a recession. Above, President Joe Biden during a virtual meeting at a Jerusalem hotel on July 14. Getty Images/Mandel Ngan/AFP

But the White House's efforts have been hit with criticism from Republicans who accuse the administration of changing the definitions in its favor.

"News flash for Joe Biden," the Republican National Committee said in a Monday press release. "You can't change reality by arguing over definitions."

In a Monday tweet, Donald Trump Jr. wrote, "Apparently The White House is changing the definition of recession this week so we can pretend that we're not in one."

Although the GDP numbers will likely be extensively revised as more data becomes available—enough so that the negative economic news could turn positive—the harsh criticisms are likely to present the Democrats with a political obstacle before the midterms.

Polling shows that the economy remains the top issue for most voters, and many are struggling with the impact of rising inflation on their day-to-day lives.

A survey conducted last month also found that the majority of Americans believe the U.S. has already entered a recession. A different poll, conducted by The New York Times, found that more than half of Americans say they are worse off financially now than they were a year ago.