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Biden resists recession talk as key economic report looms

Biden resists recession talk as key economic report looms
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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, headed for a recession..

The Commerce Department is to release new gross domestic product figures on Thursday. Leading forecasters like GDP Now from the Atlanta Fed predict the number will be negative for the second quarter in a row, an informal sign that the country is stuck in a recession.

The White House is questioning that benchmark, but otherwise it will likely prove a political sidekick 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 Tuesday’s White House press conference. He added that “the most important question economically is whether workers and middle-class families have more room to breathe.”

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

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

“In my opinion, we are not going to be in a recession,” Biden said Monday. “My hope is that we go from this rapid growth to steady growth.”

the spectrum of a recession it could worsen what already looks like a bleak round of midterm elections this November, in which Biden’s Democrats could possibly lose control of the House and Senate. Biden’s team gave technical arguments in a report issued last week about how recessions depend on a dashboard and that only the non-government National Bureau of Economic Research can formally say when a recession begins.

Republicans warned that the GDP report could show a collapsing economy, noting that Biden also got inflation wrong, as the consumer price index rose to a 40-year high despite assurances that increases prices would vanish as the country overcomes the pandemic.

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

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

The GDP report will likely be a “choose your own economy” type of message in which voters will decide which numbers resonate most with them. It is the outspokenness of the Republican Party against the Democratic undertone.

“Republicans will say two consecutive quarters of negative growth, that’s a recession,” said Michael Strain, director of economic policy studies at the center-right American Enterprise Institute. “And there will be Democrats making this kind of hard-to-follow argument that we’re not in a recession, but yes, we’re slowing down. If I had to bet, I would bet that the Republican argument has more force.”

The likely Republican message is not only more direct, but also based on how many Americans feel right now.

a july Associated Press-NORC Center for Public Affairs Research survey found that 83% believe the United States is headed in the wrong direction. That’s a sharp change from May 2021, when 54% said the country was headed in the right direction, a level of approval that overlapped with an increase in COVID-19 vaccines and package payments. of Biden’s $1.9 trillion pandemic aid.

On the other hand, the University of Michigan Consumer Confidence Index is lower now than it was during the worst months of the 2008 financial crisis, an epic recession that involved falling housing and stock markets and required an explosion of aid. governmental.

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

An alternative measure of the economy as a whole called gross domestic income contradicts GDP and shows that there was growth during the first three months of the year rather than a decline. And gasoline prices, a central 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 create almost 400,000 jobs a month, that’s not a recession,” Treasury Secretary Janet Yellen said on NBC’s “Meet the Press” on Sunday.

Still, inflation has undermined the strong job market. Wage gains have failed to keep pace with price increases, meaning many people are earning less money. There are also economic threats from abroad, as China and many European economies are slowing in a way that could spill over into the US, as the Federal Reserve focuses on raising interest rates 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 Economic Policy Institute.

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

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