London Daily

Focus on the big picture.
Tuesday, Mar 31, 2026

0:00
0:00

Biden’s word play can’t save the United States from a recession

Some denials are more worrying than their absence. A company insisting that its director will be vindicated by the forensic auditors is unlikely to succeed in calming investors; a sports team insisting it has total confidence in its coach is likely to receive a flurry of speculative applications; and a president insisting that ‘we’re not gonna be in a recession in my view’ is unlikely to do consumer confidence a great deal of good.
The major difference here is that the White House has the advantage of being able to mark its own homework. No matter what today’s GDP data shows, Biden’s team will be able to claim the US is not in recession by the cunning mechanism of simply choosing a different definition. Output’s fallen for two quarters in a row? Actually, we think you’ll find it’s a bit more complicated than that; you need to take a holistic view of the economy.

You are probably familiar with the first definition. You’ll find it being used by everyone from the Bank of England to Goldman Sachs to the European Central Bank. It’s even been used by economists at the US Federal Reserve. Take this transcript of a May 1979 meeting of the open market committee responsible for setting interest rates. Called to give forecasts, an economist presenting to the august figures of the committee defines a ‘technical recession’ as ‘two consecutive negative quarters’. Nobody bats an eyelid.

This meeting is particularly interesting given a little more context. It took place at the height of the great inflation, with prices that year rising over 13 per cent as the US economy was buffeted by sudden shocks to energy costs. The second was the presence of one Paul Volcker. In August that year, Volcker would be made chairman of the Federal Reserve. His policies would break the back of inflation, returning the economy to normality at the cost of a steep recession – a historical parallel unlikely to comfort Biden.

The two quarters definition is simple, understandable – and not official in America. As widely adopted as it is, there are other definitions available. Treasury Secretary Janet Yellen has debunked the naive idea that a technical recession is a technical recession, pointing instead to the definition used by the National Bureau of Economic Research.

The NBER dates recessions based on ‘economy-wide measures of economic activity’. Because they’re looking for a big drop in economic activity, across a big chunk of the economy, over an extended period, there is ‘no fixed rule’ for measures and weights. It’s unlikely to declare the US in recession any time soon. This has very little to do with technical definitions: the business cycle dating committee doesn’t like to put a date on peaks and troughs until all the data is in, which takes time. This raises the interesting mental image of Team Biden sitting there declaring all is well while the economy burns down around their ears, waiting for the official proclamation that there is in fact smoke to the fire.

It’s not necessarily the case that the US is about to enter a downturn under any definition. The indicators used to argue that the US is not in recession – employment, industrial output, consumer spending – still show signs of growth. But employment is a lagging indicator which tends to take time to adjust to new economic circumstances, telling you more about how the economy was in the recent past rather than it is now. Consumer spending meanwhile can be driven by concern over the declining value of cash as well as by confidence.

The Federal Reserve Bank of Atlanta’s ‘nowcasting’ model predicts that the US is set for a second quarter of negative economic growth. Given that the latest data is due out today, it would be quite a miss for a generally well-performing estimator if the US turns out to be growing strongly. This concern is compounded by the fact that the Fed raised interest rates again yesterday, further constricting economic activity in the hope of fighting inflation.

And this is the thing; if the US is growing strongly, then Biden has nothing to worry about. You only need to play word games if things are going badly. And while a recession is a fuzzily defined concept, that doesn’t mean that it isn’t something real; there isn’t a scenario where carefully redefining a recession away from ‘two negative quarters of growth’ saves his bacon in the midterms.
Newsletter

Related Articles

0:00
0:00
Close
Russia Expels British Diplomat as UK Pushes Back Against Pressure
White House App Faces Scrutiny After Claims of Continuous User Location Tracking
BBC Faces Scrutiny Over Allegations of Paid Content Linked to Saudi Arabia
UK-France Coastal Patrol Agreement Nears Breakdown Amid Migration Pressures
UK Police Detain Pro-Palestine Activist Again Weeks After Bail Release
FTSE 100 Advances as Energy and Mining Shares Gain Amid Middle East Tensions
Eli Lilly Seeks UK Pricing Deal to Unlock Renewed Pharmaceutical Investment
Three Arrested in UK After Massive Cocaine Haul Discovered Hidden in Banana Shipment
UK Fuel Prices Poised for Further Surge Amid Global Energy Pressures
Apple Subsidiary Penalized by UK Authorities for Breach of Moscow Sanctions
Western Allies Intensify Coordinated Sanctions Strategy Against Russia
UK Lawmakers Face Criticism Over Renewed Push for Social Media Restrictions
Starmer Signals UK Crackdown on Addictive Social Media Features
Rising Costs Push One in Five UK Hospitality Businesses to the Brink of Closure
Man Arrested on Suspicion of Attempted Murder After Car Strikes Pedestrians in UK, Injuring Seven
Escalating Conflict Involving Iran Tightens Fiscal Pressures and Highlights UK Economic Vulnerabilities
UK Moves to Confront Russian ‘Shadow Fleet’ Operating in Its Waters
UK Housing Divide Deepens as Older Owners Hold Wealth While Under-30s Face Mounting Barriers
London Demonstration Calls on UK to Recognize Iranian Opposition’s Provisional Government
UK Green Party Vote on ‘Zionism is Racism’ Motion Collapses Amid Internal Disputes and Technical Failures
SNL UK Ignites Debate with Sharp Royal Satire Targeting Prince Andrew and Prince William
EU Proposes ‘Emergency Brake’ to Resolve Deadlock in UK Youth Mobility Talks
Thousands Rally in London to Oppose Rise of Far-Right Movements
Hong Kong Official Rejects Allegations of Surveillance Orders Targeting UK-Based Dissidents
PayPal Expands Cryptocurrency Services to Allow UK Users to Buy and Sell Bitcoin
UK Minister Challenges Reform Party’s ‘Pro-Family’ Agenda as Debate Intensifies
Concerns Grow Over Meningitis Risk Among UK Students Amid Warning Signs of New Outbreaks
Japanese Grand Prix 2026: Schedule, UK Start Times and Full Broadcast Details
Electric Vehicles Seen as Strategic Solution to UK Fuel Reserve Concerns
Rise of Lone-Actor Threats and Online Radicalisation Drives New Wave of Antisemitic Attacks in the UK
Canada Advances Plan to Ban Cryptocurrency Donations in Election Campaigns
UK Faces Looming Medicine Shortages as Iran Conflict Threatens Supply Chains
Deadly Meningitis Outbreak in the U.K. Highlights Urgent Need for Vaccination
Fresh Claims Emerge Over Harry and Meghan’s Australia Visit as Insider Speaks Out
NATO Assessment Indicates UK Defence Spending Has Fallen Below Alliance Average
FTSE 100 Slips as Middle East Tensions Weigh on Investor Sentiment
UK Economy Begins to Feel Early Impact of Iran Conflict as Policy Challenges Intensify
Russian National Jailed in UK After Assault Case Linked to Barron Trump’s Alert
Energy Price Surge Accelerates Shift Away from Fossil Fuels in UK Homes
UK Museums House More Than 260,000 Human Remains, New Report Reveals
Surging UK Gilt Yields Reflect Inflation Pressures and Fiscal Uncertainty
UK Issues Updated Guidance on Children’s Screen Time with Focus on Balance and Wellbeing
UK Migration Figures Show Shifting Trends Across Asylum, Visas and Channel Crossings
UK Watchdog Launches Probe into Five Firms Over Alleged Fake Reviews and Ratings
Jaguar Land Rover Halts Production at UK Plant Amid Supplier Disruption
UK Police Reverse Position, Confirm Arrests Will Resume for Palestine Action Protests
UK Small Businesses Face Europe’s Steepest Cost Pressures, New Survey Reveals
US Envoy Urges UK to Proceed with King’s Visit Amid Diplomatic Sensitivities
FTSE 100 Drops Over One Percent as Middle East Tensions Weigh on Markets
UK CO2 Plant Set to Reopen as Authorities Move to Safeguard Supplies Amid Middle East Tensions
×