Biden’s Secretary of the Treasury, Janet Yellen. Photo courtesy of the World Bank
While President Trump is engaged in active combat with Federal Reserve Chairman Jerome Powell and is moving to replace Federal Reserve Governor Lisa Cook, critics claim it would politicize the Fed. Yet the Fed and Treasury had already been politicized under Biden. The Fed cut interest rates ahead of the 2024 election to make Biden’s failed economic policies look better. At the same time, Treasury Secretary Janet Yellen helped Biden avert a recession by redefining what counts as a recession.
Under Biden, inflation hit a forty-year high, and the administration’s claims of record job creation were revised sharply downward on three separate occasions. By the end of his term, the economy still had not returned to its 2019 strength under Trump. The country also endured two consecutive quarters of negative growth, the textbook definition of a recession, but Janet Yellen changed the definition to insist that Biden was doing fine.
The Biden administration showed a consistent pattern of overstating job creation. Between March 2023 and March 2024, the number of jobs in the U.S. economy was inflated by 1.18 million, which accounted for roughly 36 percent of the 3.24 million jobs the administration had initially claimed. The Bureau of Labor Statistics repeatedly revised its monthly reports downward. In February 2024, it cut December’s jobs by 43,000 and January’s by 124,000. In July 2024, it reduced May’s figure by 54,000 and April’s by 57,000. A year later, in July 2025, the change for May was revised down by 125,000 and June by 133,000, totaling 258,000 fewer jobs than originally reported.
The largest single adjustment came in August 2024, when the BLS issued its preliminary benchmark revision, reducing nonfarm employment by 818,000 jobs, or 0.5 percent. This was the biggest revision since 2009, when employment was reduced by 902,000 jobs. Normally, revisions average only about 0.1 percent, which made the scale of this correction remarkable. The final benchmark revision, released in February 2025, confirmed a reduction of 589,000 seasonally adjusted jobs, or 598,000 on a non-seasonally adjusted basis.
And while manipulating and falsifying job numbers was dishonest enough, the most insulting moment for me, as a PhD economist and former economics professor, came when Janet Yellen claimed that two consecutive quarters of negative growth was not the definition of a recession, and, worse, that it never had been. The next day, I asked my students to search through as many first-year economics textbooks as they could find online, and of course every one of them defined a recession as two consecutive quarters of negative growth.
Yet Yellen went on national television and denied it. On NBC’s Meet the Press (July 24, 2022), when asked, “If the technical definition is two quarters of contraction, you’re saying that’s not a recession?” she replied, “That’s not the technical definition. There is an organization called the National Bureau of Economic Research that looks at a broad range of data… I would be amazed if they would declare this period to be a recession, even if it happens to have two quarters of negative growth.” She repeated similar claims elsewhere: “When you’re creating almost 400,000 jobs a month, that is not a recession.” She insisted a recession required “broad-based weakening of our economy” such as mass layoffs, business closures, and household strain, and concluded, “That is not what we are seeing right now.” Other officials echoed her, including National Economic Council Director Brian Deese, who declared that “two negative quarters of GDP growth is not the technical definition of recession.”
This directly contradicted Yellen’s own earlier acknowledgment that, “A common definition of recession is two negative quarters of GDP growth, or at least that’s something that’s been true in recessions. When we have had that, there has usually been a recession.” Even the National Bureau of Economic Research, the very authority Yellen invoked, admits that while not every recession fits the two-quarter rule, “most of the recessions identified by our procedures do consist of two or more consecutive quarters of declining real GDP.” In other words, the so-called “traditional definition” she dismissed was in fact the standard one, cited in textbooks and reflected in decades of practice.
By denying that two consecutive quarters of negative growth constituted a recession, the Biden administration was not offering a nuanced economic interpretation. It was engaging in political spin, just as Senate Republican Leader Mitch McConnell observed when he said, “The White House published a whole explanation insisting that even if the new data suggest that our country is in recession, we actually won’t be. It’s almost beyond satire.”
Under Biden, there was a coordinated effort to reframe reality in the face of an obvious recession, and this is much worse than Trump’s current war with the Fed.
Trump has attempted to fire Federal Reserve Governor Lisa Cook based on allegations of mortgage fraud, while engaging in a heated debate with Fed Chairman Jerome Powell over Powell’s decision to keep interest rates high, which has slowed economic growth.
Under U.S. law, the President has the authority to fire a Federal Reserve governor or chairman for cause. While the definition of “cause” could be debated in court, such an action is within the scope of legal authority. By contrast, falsifying job numbers and changing the definition of a recession to protect a political narrative is not only dishonest but arguably illegal.
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