How Do We Know if We’re in a Recession?

Some voices from the right have accused the Biden administration of trying to “redefine” how a recession is measured. How will we know if the U.S. economy has entered a recession?

The debate around defining recessions kicked off with a White House blog post from July 21 which said the common definition — two consecutive quarters of GDP contraction — was “neither the official definition nor the way economists evaluate the state of the business cycle.” Instead, the White House pointed to the measure used by the National Bureau of Economic Research: “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.” 

Several voices in the Biden administration have argued that the U.S. economy remains relatively strong despite inflation, pointing to low unemployment and other factors. However, GDP contracted at an annual rate of 1.6% in the first quarter of 2022, and second quarter GDP data is expected Thursday. If GDP contracted again, that could put the common recession definition at odds with the official economic definition. 

Perspectives on measuring recessions often aligned with partisan biases. While a Washington Examiner (Lean Right bias) editorial firmly argued that the “true standard” of a recession was two consecutive quarters of GDP contraction, an analysis in The New York Times (Lean Left bias) said this definition was “unofficial” and instead pointed to the formal economic definition.