While the big media and some economists might disagree, a majority of Americans believe that the U.S. economy is now in a recession, the latest I&I/TIPP data show. And voters, when asked what caused it, are clear in their response: Government.
Recently, a number of government economists, including Fed chief Jerome Powell and Treasury Secretary Janet Yellen, along with non-economist President Joe Biden, have suggested that, despite two quarterly declines in U.S. GDP, the country is not in a recession.
“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,” a blog from the White House Council of Economic Advisers noted in a typical response, calling a recession “unlikely.”
Well, most Americans don’t agree.
A recent IBD/TIPP Poll, for instance, found that fully 62% believe the U.S. is in recession, including a tri-partisan majority of Democrats (51%), Republicans (74%), and independents (56%). That compares to an overall 18% who say the economy isn’t in a recession, and 20% who say they’re “not sure.” Other polls concur.
To further understand what Americans believe about recessions, the August I&I/TIPP Poll asked 1,335 Americans from across the country to respond to the following definitional question: “Do you agree or disagree with the definition of a recession as two consecutive quarters of negative GDP growth?”
This poll was taken from Aug. 2-4 and has a margin of error of +/-2.8 percentage points.
Among those queried, 56% agreed the definition of a recession is two straight quarters of GDP decline, versus just 13% who said it isn’t, and 30% who said they were “unsure.”
As a side note, two declining quarters of GDP has been the general rule of thumb definition used for decades by Wall Street, private economists, and politicians to tell whether the economy has slipped into recession or not.
So current politicians’ and government officials’ comments that two quarters of GDP decline do not a recession make aren’t convincing average people. That’s especially true since GDP fell at a 1.6% annual rate in the first quarter and at a 0.9% annual rate in the second quarter.
Moreover, the agreement on what constitutes a recession cuts across differences in political affiliation, with 52% of Democrats, 62% of Republicans, and 52% of independents agreeing that a two-quarter decline marks a recession.
The National Bureau of Economic Research, the quasi-official economic think tank that traditionally decides whether the U.S. is in recession, doesn’t necessarily use the “two quarters decline” metric to declare when the economy is in a downturn. Instead, it uses a vague formula, calling a recession only after “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.”
But going back through the post-World War II era data, 10 of the 12 recessions included at least two GDP quarterly declines in a row. The other two (1960 and 2001) included two GDP declines, but not in a row.
One thing is clear: The current recession is unique in that the U.S. and other countries intentionally brought them on by locking down their economies during the COVID-19 pandemic.
And that can clearly be seen in the I&I/TIPP Poll’s second question, which we asked of the 826 people who believe the U.S. is in a recession: “What caused the recession?”
We offered seven possible responses.
The top three in terms of percentages included: “Too much government spending” (58%), “President Biden and Congress” (53%), and “COVID lockdowns and masking policies” (53%).
Other responses included “‘Woke’ policies of business and government” (35%), “too many regulations” (29%) and “Federal Reserve policy” (28%), with an additional 11% saying they were “not sure.”
As the 2022 midterm elections loom, partisan differences in the polling data have emerged. Republicans were far more likely to blame government spending (71%) and Biden and Congress (79%) than either Democrats (41% of whom blame spending and 23% blame Biden/Congress) or independents (53% and 39%).
Note that “too much government spending” gathers a strong response from both major parties and independents alike. That could mean recent congressional bills to spend even more will not be welcomed by voters as some lawmakers hoped.
For instance, Congress’ recent passage of the so-called Inflation Reduction Act spends an additional $433 billion. That includes $370 billion for “green” “low-carbon technologies” to address climate change. Yet, as noted above, nearly half of Democrats blame government spending for the recession.
Moreover, a surprising share of Democrats — 61%, more than any other group in the poll — blame the COVID lockdowns and masking rules for the economy’s recent meltdown. And nearly a quarter (23%) agree that “woke” business and government policies have contributed to the recession.
Will that translate to less support for Democratic Party candidates, who are closely identified with both the lockdowns and masking policies, and with supporting “woke” initiatives, in this fall’s midterms? Or will party loyalty prevail?
One other significant split has revealed itself, this between blacks and Hispanics. In some cases, the differences are as large as those between Democrats and Republicans.
While 55% of Hispanic respondents blamed government spending as the No. 1 cause of the recession, just 40% of black respondents did. And just 17% of African-American poll participants said Biden and Congress deserved recession blame, versus 49% of Hispanics.
Hispanics are also more likely to finger “woke” policies (36%) for the recession than blacks (15%). For what it’s worth, the two major minority groups in America appear to be splitting apart on many key issues these days.
Each month, I&I/TIPP publishes polling data on this topic and others of broad public interest. TIPP’s reputation for excellence comes from being the most accurate pollster for the past five presidential elections.
Terry Jones is an editor of Issues & Insights. His four decades of journalism experience include serving as national issues editor, economics editor, and editorial page editor for Investor’s Business Daily.