June 29th, 2022


'I'm not concerned about a recession'

Jeff Jacoby

By Jeff Jacoby

Published May 5, 2022

'I'm not concerned about a recession'
The nation's gross domestic product shrank by 1.4 percent in the first quarter of 2022. It was the first time the nation's economic output has contracted since early 2020, when the COVID-19 pandemic triggered sweeping shutdowns and drove the US economy into a steep, but very short, recession.

The standard definition of a recession is when GDP declines for two quarters in a row, and two quarters was as long as the COVID downturn lasted — just enough to be labeled with the R-word before the economy rocketed back to life in the third quarter of 2020.

Two years ago, the economy was fundamentally healthy; there would have been no recession had businesses not been forced to close by government order. Today's economy is giving off a very different vibe — prices spiking, interest rates rising, the stock market tanking. Should we worry that the United States is heading once again into a recession?

Here's how economists, bankers, and others read the situation:

The Wall Street Journal, April 10: "Recession Risk Is Rising, Economists Say."

Yahoo! Finance, April 11: "Suddenly everyone is obsessed about a recession."

CNN Business, April 12: "'Recession shock' is coming, Bank of America warns."

NPR, April 13: "Why there are growing fears the US is headed to a recession."

MarketWatch, April 15: "Recession is now the 'most likely' outcome for the US economy, not a soft landing, Larry Summers says."

Fox News Business, April 28: "US economy on brink of 'major recession,' Deutsche Bank warns."

If all this has you concerned about what's coming, you're not alone:

CNBC, April 5: "81% of US adults are worried about a recession hitting this year, survey finds."

And then there's President Biden. Asked on Thursday about the shrinking GDP and what it portends, he responded by channeling his inner Alfred E. Neuman. As reported in The Washington Times:

Biden Says He's Not Worried About Recession as Economy Shrinks First Quarter

President Biden, who was wrong last summer when he predicted high inflation would be "temporary," said Thursday he doesn't foresee a recession despite the news that the US economy registered negative growth in the first quarter of 2022.

"I'm not concerned about a recession," Mr. Biden told reporters at the White House.

"I mean, you're always concerned about recession but the GDP, you know, fell to 1.4 percent."

The economy did not fall to 1.4 percent between January and March; it fell by that amount. Perhaps it was a fluke, and the numbers will turn around in the current quarter. Or perhaps those banks, economists, and 81 percent of American adults are right to be worried. I sincerely hope that this was just a three-month bug, that the economy is reviving, and the president's benign complacency will prove prophetic.

But I'm not betting on it. =