Biden struggles with recession talk as major economic report looms

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

On Thursday, the Commerce Department will release new GDP numbers. Top forecasts such as GDP now for the Federal Reserve now expect the number to be negative for the second consecutive quarter – an unofficial sign that the country is stuck in an economic downturn.

The White House objects to this criterion, but it will likely prove otherwise to be a political friend of Republicans in an election year.

National Economic Adviser Brian Daisy insisted during Tuesday’s White House press conference that “two negative quarters of GDP growth is not the technical definition of a recession.” “The most important question from an economic point of view is whether workers and middle-class families have more breathing space,” he added.

Deese and other members of the Biden administration are proactively telling voters not to judge the economy by GDP or inflation lonliness. They say people should look at job gains, industrial production and other measures that indicate continued growth, even as Americans are pessimistic in opinion polls about the economy and Biden.

The president himself insists that the economy is just beginning to cool off after a sharp recovery from the 2020 recession caused by the coronavirus pandemic.

“We’re not going to be in a recession in my view,” Biden said Monday. “I hope we can move from this rapid growth to steady growth.”

stagnation ghost It could exacerbate what already appears to be a grim round of midterm elections in November, in which Biden Democrats will likely lose control of the House and Senate. Biden’s team made the technical arguments in a report released last week On how recessions depend on a dashboard of indicators and that only the non-governmental National Bureau of Economic Research can determine when the downturn will start.

Republicans warn that the GDP report could show the economy in a meltdown, noting that Biden was also wrong on inflation as the consumer price index jumped to a 40-year high despite assurances that price hikes will fade as the country weathers the pandemic.

“The White House has published a full explanation insisting that even if the new data indicates that our country is in a recession, in fact we will not be,” Senate Republican Leader Mitch McConnell said in a speech to the Senate on Monday.

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

The GDP report is likely to be a “choose your own economy” type of message where voters will decide which numbers resonate with them the most. It’s the bluntness of the Republican Party as opposed to the nuance of the Democrats.

“You’re going to have Republicans saying two straight quarters of negative growth — that’s a recession,” said Michael Strain, director of economic policy studies at the American Enterprise Institute. “And you’ll have Democrats making it hard to make that kind of argument that we’re not in a recession, but, yeah, we’re slowing down. If I had to bet, I’d bet the Republican debate would gain more momentum.”

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

A July poll from the Associated Press-NORC Center for Public Affairs Research They found that 83% believe the United States is heading in the wrong direction. It’s a sharp reversal from May of 2021 when 54% said the country is heading in the right direction, a level of approval that overlaps with increased COVID-19 vaccinations and payments from Biden’s $1.9 trillion pandemic relief package.

Separately, the University of Michigan’s index of consumer confidence is now lower than it was during the worst months of the 2008 financial crisis, an epic recession that included the collapse of housing and stock markets and demanded a boost in government aid.

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

An alternative macroeconomic measure called GDP contrasts with GDP, which shows that there is growth during the first three months of the year rather than decline. Gasoline prices, a key Biden weakness, have fallen more than 60 cents a gallon since mid-June, evidence that some inflationary pressures are easing.

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

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

However, inflation has undermined the strong labor market. Wage gains fail to keep pace with price increases, which means many people are effectively making less money. There are also economic threats from abroad as China and many European economies slow in ways that may extend to the US as the Federal Reserve focuses on raising interest rates in order to bring down inflation.

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

“People will understand that if we continue with a very low unemployment rate, the idea that we are in a recession doesn’t make much sense,” she said.

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