Who Really Needs a Definition of Recession?

Source: Foundation for Economic Education
by Peter Jacobsen

“Social media is ablaze with a dispute over whether the US economy is in a recession. The debate was prompted by the White House’s statement on upcoming GDP data. The statement claims: ‘While some maintain that two consecutive quarters of falling real GDP constitute recession, that is neither the official definition nor the way economists evaluate the state of the business cycle.’ The debate on social media is about whether this is true, but I think a different question takes priority. Why do we care? I’m not asking why we should care about whether the economy is bad — that’s obviously important. I’m asking a different question. Why do we care if we call it a recession, and why do we need a definition of recession at all?” (07/26/22)