Biden Insists There’s No Recession as He Confronts Latest Economic Risk

After a virtual meeting with tech executives on Monday, President Biden was asked about his recent financial headache: how worried should Americans be that the country may be in recession?

“We won’t be in recession,” he replied.

Presidential aides have publicly announced much of the past few days, at least informally, prior to an important economic dataset released Thursday, which could signal the beginning of a recession by a general shorthand definition. I filed a lawsuit.

This is the latest chapter in the challenges that Biden has faced since taking office. Attempting to convince Americans that the economic recovery is stronger than people perceive has almost failed.

After more than a year of trying to alleviate consumer anxiety over rising inflation, Biden administration officials embarked on a sustained public campaign to dispel concerns that the country’s economy was in recession. ..Officials rely heavily on the strength of the job market and frequently refer to the standards officially used by the Economic Research Commission. Declare the beginning and end of a recession..

The campaign was complicated by the Federal Reserve, which sought to slow the economy in an attempt to combat inflation under control. On Wednesday, the Fed was expected to bring an even bigger rise in interest rates, perhaps raising interest rates by three-quarters of a percentage point, increasing the likelihood of a policy-induced recession later this year.

The government’s claim that the country is not currently in recession is supported by several economic indicators, many predictors, and the technical definition of what constitutes a recession adopted by the National Bureau of Economic Research’s Business Cycle Date Commission. I did.

“Personal consumption remains strong and household balance sheets remain in good shape,” Brian Deese, chairman of the National Economic Council, said in a briefing at the White House on Tuesday. The full range of economic data “did not coincide with the recession,” he said.

But the fact that Mr Biden and his aides spent a lot of time fending off the recession tells us how moody Americans have grown about the economy and why the administration has changed their minds so much. It shows whether it is difficult.

In other words, if you’re explaining how the recession call is made, you’re losing.

Biden has tried for more than a year to convince Americans that the economy is strong and that inflation, which is moving at the fastest pace in 40 years, is waning. He highlighted the rapid job creation and declining unemployment rate, noting that it fell to 3.6 percent on Monday.

Americans haven’t bought it. Soaring prices for food, gasoline and other products have weakened consumer confidence. Voter dissatisfaction with Mr. Biden’s economic stewardship has led to presidential policy to foster inflation and undermine American purchasing power just months before the midterm elections, when the Democratic Party decides whether to continue to rule Congress. It rose as well as the accused Republican attacks.

About half of the respondents to the June survey of Americans across the country conducted for the New York Times by an online survey platform Momentive They said they believed the economy was already in recession or in recession. Another quarter said the economy was “stagnation.” Republican respondents are more pessimistic than Democrats, reflecting the continued partisan view of economic performance depending on who occupies the White House.

However, more than half of independent voters said the country’s economy was in recession or recession, as was the case with one-third of Democrats.

Government officials frequently acknowledge the pressure Americans feel from rising prices, which have had the effect of lowering the wages of typical inflation-adjusted workers. They also complained that Mr. Biden could not gain any more credit for the rapid recovery of employment after inheriting the economy that had just begun to emerge from the rapid and rapid pandemic recession of 2020. Expressed.

Authorities point out that the United States continues to grow strong employment as evidence that the United States is not sluggish, with unemployment near its lowest level in 50 years, and gas prices are now falling for the sixth straight week. It states that it is doing.

Still, the Biden administration’s claim that the country is not in recession may be more focused on the dark potential currently hanging in the economy than the White House would otherwise want to see. .. Fox and CNN set a record this week about President Biden’s broadcast reference to the word “recession,” and CNBC approached it. In summary, these three cable networks, with one exception, have referred to this month’s “recession” more often than any other month since 2009. Data edited by the GDELT project..

If the Commerce Department reports Thursday that the economy has shrunk for the second consecutive quarter this spring, authorities are keenly aware that the US economy could soon come across a commonly used shorthand of recession.

The definition is easy to understand and widely adopted. A recession is triggered when the economy shrinks for the second consecutive quarter. In the first quarter of this year, the US economy shrank 1.6%. Many predictors expected Thursday’s GDP report to shrink further in the second quarter, while others predicted slightly positive growth instead.

Global trends haven’t helped the White House make that claim. According to the International Monetary Fund’s pessimistic forecasts released Tuesday, some indicators suggest that the United States is already in a “technical” recession. Forecasters warned that growth in the United States, Europe and China as a whole would slow, increasing the likelihood of a global recession.

The administration sought to argue that the definition of shorthand recession did not fit into the strange situation of a US pandemic recovery, especially given the strong labor market. “Official recession decisions and economists’ assessments of economic activity are based on the big picture of data, including labor markets, consumer and corporate spending, industrial production, and income,” said a member of the White House Economic Advisory Council. It states. I wrote last week..

Treasury staff I wrote this week “Great evidence suggests that the economy is not currently in recession.” They measure economic growth by gross domestic product, which counts the value of goods and services produced in the economy, and wages, profits, and investments. He pointed out the difference in another measure called gross domestic product. Gross domestic product shrank in the first quarter of this year, but gross domestic product increased.

In a sense, the question didn’t have to be resolved immediately. The Commerce Department may revise its second-quarter growth estimates at least twice after its first reading on Thursday, and may revise its first-quarter estimates in an annual update later this year. With all these revisions, the country could go in and out of the shorthand recession standard multiple times. Two-tenth percentage points of economic growth measurements can be scaled in either way, but Americans will find it difficult to notice the difference in their daily lives.

Still, this distinction is politically and practically important. Spiral economic pessimism has fallen below Biden’s approval rating and has contributed to the Democratic fear of losing at least one parliament in the midterm elections. Worrying that the economy is in recession can lead consumers to cut spending and employers to reduce employment. Just this week, Wal-Mart reported that it has significantly reduced its profit forecasts and that high prices are influencing consumer choice in stores.

Mr Biden sought to stir up economic optimism on Tuesday. Korean company, SK GroupAnnounces $ 22 billion in new investment in the United States. Mr Biden said the investment was “further evidence that the United States is open to business.”

Perhaps Biden’s greatest political danger is that he is right about the possibility of a recession at the moment, but wrong in the future. Even if the economy grows in the second quarter, it could fall into recession this summer or just before the midterm elections, especially if global oil prices soar again.

The IMF warned on Tuesday that the risks to the global economy are “overwhelmingly downside.” We have revised down our growth forecast in the United States and forecast annual growth in the fourth quarter of 2023 to be only 0.6%.

Such a slowdown, IMF officials wrote, “no matter how we define the term, it will be increasingly difficult to avoid a recession.”

Ben Casselman Contribution report.