Biden fights talk of recession as key economic report looms
by Associated Press
Top forecasts such as the Atlanta Federal Reserve's GDPNow are predicting that the figure will be negative for the second straight quarter.
Facing a potentially grim report this week on the economy’s overall health, President Joe Biden wants to convince a skeptical public that the U.S. is not, in fact, heading into a recession.
On Jul. 27, the Commerce Department will release new gross domestic product figures. Top forecasts such as the Atlanta Federal Reserve’s GDPNow are predicting that the figure will be negative for the second straight quarter — an informal signal that the country is stuck in a downturn. That’s political chum for Republicans in an election year.
The Biden administration is pre-emptively telling voters not to judge the economy by GDP or inflation alone. It says people should look at job gains, industrial output and other measures that point toward continued growth, even as Americans are downbeat in polls on the economy and Biden. The president maintains the economy is just cooling 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 on Jul. 25. “My hope is we go from this rapid growth to steady growth.”
The specter of a recession could worsen what already appears to 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 of indicators and that only the non-governmental National Bureau of Economic Research can formally say when a downturn begins.
Republicans warn that the GDP report could show an economy in collapse, noting that Biden was also wrong on inflation as the consumer price index has jumped to a 40-year high despite assurances that the price increases would fade as the country moved past the pandemic.
The GDP report will likely be a “choose your own economy” kind of messaging in which voters will decide which numbers resonate with them the most. It’s GOP bluntness against Democratic nuance.
The negativity has left the Biden administration trying to make the case that things are better than people think. Their argument starts with the torrid pace of hiring, with an average of 375,000 jobs being added monthly during the second quarter. Unemployment has held at 3.6% since March.
An alternative measure of the overall economy called gross domestic income contradicts GDP, showing that there was growth during the first three months of the year instead of decline. And gasoline prices, a core vulnerability for Biden, have fallen more than 60 cents a gallon since the middle of June, evidence that some inflationary pressures are easing.
Inflation has undermined the robust job market. Wage gains have failed to keep pace with price increases, meaning many people are effectively earning less money. There are also economic threats from abroad as China and many European economies are slowing down in ways that could spill over to the U.S. as the Federal Reserve is focused on raising interest rates in order to lower inflation.