What if there was a recession and no one called it that

It could be labeled "a period of transition"

I’ve written before about the idiocy coming out of the White House concerning both inflation and the coming recession.

Is that the fat lady singing?

In that piece I compared the White House Economic Advisor Brian Deese to Baghdad Bob. At the time I thought that the White House would continue to come out and tout the “transition” line until it couldn’t be denied any longer and the NBER officially announced that we were in a recession.

In a blog post last week, the White House moved the goalposts on what exactly constitutes a recession. You can read the whole thing HERE. What it boils down to is cover for the NBER to delay their recession call. Here’s the opening paragraph:

“What is a recession? While some maintain that two consecutive quarters of falling real GDP constitute a recession, that is neither the official definition nor the way economists evaluate the state of the business cycle. Instead, both official determinations of recessions and economists’ assessment of economic activity are based on a holistic look at the data—including the labor market, consumer and business spending, industrial production, and incomes. Based on these data, it is unlikely that the decline in GDP in the first quarter of this year—even if followed by another GDP decline in the second quarter—indicates a recession.”

At first I brushed this off as more White House posturing but then I had a conversation with a friend about it and it made me dig a little deeper.

Now the NBER (National Bureau of Economic Research) has a Business Cycle Dating Committee that is the “official recession scorekeeper”. They set the dates of the peaks of economic activity and troughs based on six monthly data series including non-farm payrolls, real personal income less transfers, real personal consumption expenditures, wholesale-retail sales adjusted for price, household survey employment data, and industrial production. Their definition of a recession is, “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.” Former NBER President Arthur Burns co-wrote a book in 1946 called “Measuring Business Cycles”. It is practically the NBER bible.

Arthur Burns was the Fed Chairman from 1970 through 1978, when the economy went through “a period of transition” where high inflation was the norm and Fed actions were overly influenced by political pressure.

What the White House is doing in their blog post about recessions is provide cover for the NBER to delay calling one. Now the question comes, will they take the bait?

The NBER Business Cycle Dating Committee is made up of 6 members, 4 men and 2 women. The committee is currently chaired by Robert Hall of Stanford University. The other 5 members include; James Poterba of MIT (who is also the president of the NBER), Robert Gordon of Northwestern University, Valerie Ramey of UC San Diego, Christina Romer of UC Berkley, David Romer (Christina’s husband) of UC Berkley, James Stock of Harvard, and Mark Watson of Princeton.

All members of the committee have been appointed to their position by the NBER President, James Poterba, who has been in that position since 2008. From the CVs of the Romers and James Stock, it is obvious these guys are far-left. They call themselves “New Keynesians”. Make no buts about it, this “new keynesian” idea is MMT.

On the NBER’s own website, they provide themselves with plenty of cover for delaying a recession call.

“Q: Typically, how long after the beginning of a recession does the committee declare that a recession has started? After the end of the recession?

A: Our determination of the trough date in April 2020 occurred 15 months after that date, in July 2021. Earlier determinations took between 4 and 21 months. There is no fixed timing rule. We wait long enough so that the existence of a peak or trough is not in doubt, and until we can assign an accurate peak or trough date.”

What motivation does the NBER have in calling a recession today? None. In fact, in the face of two consecutive negative GDP prints, they could say nothing until 2024 or later. Look at the above quote again, “There is no fixed timing rule”. Who’s to say they don’t call it a recession until after the 2024 elections?

I’m not the first one to point this out. QuothTheRaven had a piece out today on it and Zerohedge re-blogged it, also a local newspaper beat us both to the punch two weeks ago. People are waking up. To deny what many can already see and feel in their pocketbooks, only makes the “experts” appear out of touch with reality. Confidence will be lost and the tide will turn regardless of whether the NBER makes an official call or not. When a former stripper turned musician can see the writing on the wall, you know that the public already knows whats happening.

This is borderline fraud and will only make the correction more dramatic.