WASHINGTON, July 26 (BNA) US Treasury officials said that aggregate income and employment figures indicate that the economy is healthy and not in a recession, even if data due this week showed gross domestic product declined for the second consecutive quarter.
The US Commerce Department is due to release second-quarter gross domestic product on Thursday, and economists polled by Reuters had forecast a gain of just 0.5%, with 28% of 78 respondents expecting a contraction.
After a 1.6% annual decline in first-quarter GDP, a negative second-quarter result is likely to prompt critics of President Joe Biden to declare a US recession under the traditional shorthand metric used by economists, journalists and analysts – two consecutive quarters of decline.
Ben Harris, Treasury Assistant Secretary for Economic Policy and Neil Mehrotra, Deputy Assistant Secretary for Macroeconomics, wrote that gross domestic income (GDI), which measures total income — wages, business profits, rent and interest income — continued to rise in the first quarter at a 1.8% annualized pace, while GDP decreased.
They said while second-quarter GDI data won’t be available until the end of August, some components of GDI, including employee compensation, landlord income and rental income, are showing increases in the quarter.
Officials added that the tax receipts also indicate strong growth in corporate income.
While first-quarter GDP, which only counts final goods, was negative, they said the 2% increase in real GDP for the period was a result of the economy producing more “stuff,” but more of this went to intermediate goods that didn’t. It is calculated in the GDP.
Identifying recessions is not easyEnnis. The private research group considers that the official arbiter of economic recessions in the United States also looks at a wide range of indicators, including jobs, industrial production, spending and income.
A recession has never been announced without job losses, and employment in the US in particular remains strong.
ZHB