Faced with a potentially dire report this week on the overall health of the economy, President Joe Biden wants to convince a skeptical public that: The US is not actually going into a recession.
The Ministry of Commerce will release new gross domestic product figures on Thursday. Top forecasts, such as the Atlanta Federal Reserve’s GDPNow, forecast the number to be negative for the second consecutive quarter – an unofficial signal that the country is stuck in a downturn.
The White House opposes this criterion, but otherwise it would prove a political friendship 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 said during a White House press briefing on Tuesday. “The most important economic question is whether working people and middle-class families have more breathing room,” he added.
Deese and other members of the Biden administration have previously told voters not to judge the economy by GDP or GDP. inflation alone. Even if Americans are pessimistic about the economy and Biden polls, they say people should look at job gains, industrial production and other measures that point to continued growth.
The president himself argues that after a sharp recovery from the 2020 recession caused by the economic crisis, the economy began to cool. coronavirus pandemic.
“I don’t think we’re going to go into a recession,” Biden said on Monday. “My hope is that we move from this rapid growth to stable growth.”
ghost one recession It could worsen what appears to be a bleak midterm round this November, when Biden’s Democrats could possibly lose control of the House and Senate. Biden’s team gave technical arguments. report published last week about how recessions are tied to a dashboard, and only the non-governmental National Bureau of Economic Research can officially tell when a downturn begins.
Republicans warned that the GDP report could indicate a collapsing economy, and Biden was also wrong about inflation, as the consumer price index jumped to a 40-year high despite assurances that price gains would ease as the country outlasts the pandemic.
“The White House has issued a statement insisting that even if new data show our country is in recession, we actually won’t,” Senate Republican Leader Mitch McConnell said in a speech to the Senate on Monday. Said.
“Those who say there won’t be inflation,” he continued, “insist that we’re not in recession now. Draw your own conclusions.”
The GDP report will likely be a “choose your own economy” type of message, where voters will decide which numbers will most resonate with them. GOP candor versus democratic nuance.
“You’re going to have Republicans say two consecutive quarters of negative growth — it’s a recession,” said Michael Strain, director of economic policy research at the centre-right American Enterprise Institute. “And it’s going to make the Democrats argument that we’re not in a recession that much harder to follow, but yeah, we’re slowing down. If I had to bet, I’d bet the Republican argument would get more traction.”
The likely GOP message is not only more direct, but also leans towards how many Americans are feeling right now.
and July Survey from the Associated Press-NORC Public Relations Research Center He found that 83% believed the US was going in the wrong direction. That’s a sharp turnaround from May 2021, where 54% said the country was heading in the right direction, a level of approval that coincided with the surge in vaccines against COVID-19, and payments from Biden’s $1.9 trillion pandemic relief package.
Separately, the University of Michigan’s consumer sentiment index is 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 required a burst of government aid.
The negativity has left the Biden administration trying to make the claim that things are better than people think. Their argument begins with the horrendous pace of hiring, with an average of 375,000 jobs added per month in the second quarter. Unemployment has remained at 3.6% since March.
An alternative measure of the overall economy, called gross domestic income, contrasts with GDP, which shows growth rather than decline in the first three months of the year. Gasoline prices, a key vulnerability for Biden, have dropped more than 60 cents per gallon since mid-June, proof that some inflationary pressures are easing.
Both publicly and privately, management officials say the GDPR report won’t tell the whole story.
“It’s not a recession when you create about 400,000 jobs a month,” Treasury Secretary Janet Yellen told NBC’s “Meet the Press” on Sunday.
Still, inflation has undermined the robust job market. Wage increases have not kept up with price increases, meaning many people are actually making less money. There are also economic threats from abroad, such as China, and many European economies are slowing down that could spill over into the United States as the Federal Reserve focuses on raising interest rates to keep inflation down.
But as hiring continues, liberal economists believe public opinion will change and recession fears will subside. Heidi Shierholz, head of the Liberal Economic Policy Institute, said the White House analysis was “data based”.
“People will understand that the idea that we’re in a recession doesn’t make much sense if we continue to have extremely low unemployment,” he said.
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