Biden battles recession talk as key economic report looms

Faced with a potentially grim report this week on the overall health of the economy, President Joe Biden wants to convince a skeptical public that the United States is not, in fact, heading into a recession.

The Commerce Department will release new gross domestic product numbers on Thursday. Major forecasts such as the Atlanta Federal Reserve’s GDPNow call for the figure to be negative for the second consecutive quarter – an informal signal that the country is stuck in a recession.

The White House disputes that reference, but it will likely otherwise prove a political friend for Republicans in an election year.

“Two negative quarters of GDP growth is not the technical definition of a recession,” national economic adviser Brian Deese insisted during the White House press briefing on Tuesday. He added that “the most important question economically is whether middle-class workers and families have more room to manoeuvre.”

Deese and others in the Biden administration preemptively tell voters not to judge the economy by GDP or inflation only. They say people should watch job gains, industrial production and other measures that point to continued growth, even if Americans are bearish in polls on the economy and Biden.

The president himself maintains that the economy is cooling off just after a strong recovery from the 2020 recession caused by the coronavirus pandemic.

“We’re not going to be in a recession, in my opinion,” Biden said Monday. “Hopefully we will move from this rapid growth to steady growth.”

The spectrum of a recession could worsen what already appears to be a dismal cycle of midterm elections in November, in which Biden’s Democrats could eventually lose control of the House and Senate. Biden’s team gave technical arguments in a report published last week about how recessions depend on a dashboard of indicators that only the nongovernmental National Bureau of Economic Research can officially tell when a downturn is starting.

Republicans warn the GDP report could show a collapsing economy, noting Biden was also wrong about inflation as the consumer price index hit a 40-year high despite assurances that price increases would fade as the country outgrew the pandemic.

“The White House has released a whole explanation insisting that even if the new data suggests that our country is in a recession, we won’t be,” Senate Republican Leader Mitch McConnell said Monday in a speech to the Senate.

“The same people who said inflation wouldn’t happen,” he continued, “are now insisting we’re not heading into a recession. Draw your own conclusions.

The GDP report will likely be a type of “choose your own economy” message in which voters decide which numbers are most relevant to them. It’s GOP brutality against Democratic nuance.

“You’ll have Republicans saying two straight quarters of negative growth — that’s a recession,” said Michael Strain, director of economic policy studies at the center-right American Enterprise Institute. “And you’ll have Democrats making these kind of hard-to-follow arguments that we’re not in a recession, but, yeah, we’re slowing down. If I had to bet, I’d bet the Republican argument gets more traction.

Not only is the likely message from the GOP more direct, but it also delves into how many Americans are feeling right now.

a july Associated Press-NORC Center for Public Affairs Research poll found that 83% think the United States is going in the wrong direction. It’s a stark reversal from May 2021, when 54% said the country was moving in the right direction, a level of approval that overlapped with an increase in COVID-19 vaccinations and payments from the program. Biden’s $1.9 trillion pandemic relief package.

Separately, the University of Michigan’s Consumer Confidence Index is lower today than it was during the worst months of the 2008 financial crisis, an epic recession that caused markets to crash. real estate and stock market and required an increase in government assistance.

The negativity has left the Biden administration trying to argue that things are better than people think. Their argument begins with the blistering pace of hiring, with an average of 375,000 jobs added monthly during the second quarter. Unemployment has held steady at 3.6% since March.

Another measure of the overall economy called gross domestic income contradicts GDP, showing that there was growth in the first three months of the year instead of a decline. And gasoline prices, a fundamental vulnerability for Biden, have fallen more than 60 cents a gallon since mid-June, evidence that some inflationary pressures are easing.

Both publicly and privately, administration officials say the GDP report won’t tell the whole story.

“When you’re creating nearly 400,000 jobs a month, that’s not a recession,” Treasury Secretary Janet Yellen said on NBC’s “Meet the Press” on Sunday.

Yet inflation has undermined the robust labor market. Wage gains have not kept pace with price increases, which means many people are actually making less money. There are also economic threats from abroad, as China and many European economies slow in ways that could spill over to the United States, with the Federal Reserve focusing on raising interest rates in order to reduce inflation.

But as long as hiring continues, liberal economists believe public opinion will change and fears of a recession will fade. The White House analyzes are “data-driven,” said Heidi Shierholz, president of the liberal Institute for Economic Policy.

“People will understand that if we continue to have extremely low unemployment, the idea that we’re in a recession just doesn’t make much sense,” she said.

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