By Josh Bock
Faced with a potentially grim report on the overall health of the economy this week, President Joe Biden wants to convince a skeptical public that America is not, in fact, headed for recession.
The Commerce Department will release new gross domestic product data on Thursday. Top forecasters like the Atlanta Federal Reserve’s GDPNow are predicting that the figure will be negative for the second straight quarter — an informal indicator that the country is stuck in a recession.
The White House is disputing the criteria, but it is likely to be a political straw for Republicans in an otherwise election year.
“Two negative quarters of GDP growth is not the technical definition of a recession,” National Economic Adviser Brian Days insisted during a White House press briefing on Tuesday. “The most important question economically is whether working people, and middle-class families, have more breathing room,” he added.
Dez and other members of the Biden administration are already telling voters not to judge the economy by GDP or inflation. He says people should look at job gains, industrial production and other measures that point to continued growth, even as the U.S. economy and the polls on Biden are down.
The president himself maintains that the economy is still cooling after a rapid recovery from the 2020 recession due to the coronavirus pandemic.
“I don’t think we’re going to be in a recession,” Biden said Monday. “My hope is that we will go from this rapid growth to steady growth.”
The recessionary picture could worsen as indicated by a bleak run-up to the midterm elections this November, in which Biden’s Democrats could potentially lose control of the House and Senate. In a report released last week, Biden’s team made technical arguments about how a recession depends on a dashboard of indicators and that only the unofficial National Bureau of Economic Research can officially say when a recession would begin. Is.
Republicans have warned that the GDP report could doom the economy, 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 end as the country moves past the pandemic.
Senate Republican leader Mitch McConnell told the Senate on Monday that “the White House released a comprehensive explanation emphasizing that if new data shows that our country is in recession If it is, then we won’t actually be.”
“The same people who said there won’t be inflation,” he continued, “are now insisting we’re not headed for a recession. Draw your own conclusions.”
The GDP report will likely be a “pick your own economy” type of messaging with voters deciding which numbers resonate most with them. It’s GOP bluntness against Democratic nuance.
“You have Republicans saying 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 you’re going to have a hard time getting Democrats to follow the argument that we’re not in a recession, but, yes, we’re slowing down. If I had to bet, I’d bet that the Republican argument is mostly It’s done.”
Not only is the likely GOP message more straightforward, but it also hinges on how many Americans feel right now.
A July poll by the Associated Press-NORC Center for Public Affairs Research found that 83 percent believe America is headed in the wrong direction. That’s a sharp reversal from May 2021, when 54% said the country was headed in the right direction, a level of approval boosted by increased vaccinations against COVID-19 and payments from Biden’s $1.9 trillion pandemic relief package. It is transgressive.
Separately, the University of Michigan’s index of consumer sentiment is lower now than it was in the worst months of the 2008 financial crisis, an epic recession that included housing and stock market crashes and required government bailouts.
The negativity has left the Biden administration trying to make the case that things are better than people think. Their argument starts with the faster pace of employment, with an average of 375,000 jobs added per month during the second quarter. Unemployment has been 3.6 percent since March.
An alternative measure of the overall economy, called gross household income, is contrasted with GDP, showing growth rather than contraction during the first three months of the year. And gasoline prices, a primary threat to 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.
“It’s not a recession when you’re creating about 400,000 jobs a month,” Treasury Secretary Janet Yellen said Sunday on NBC’s “Meet the Press.”
Still, inflation has undermined a strong job market. Wage growth has failed to keep pace with price rises, meaning many people are effectively making less money. There are also economic risks from abroad as China and many European economies are slowing in ways that could spill over to the US as the Federal Reserve focuses on raising interest rates to curb inflation.
But as long as hiring continues, liberal economists believe that public opinion will shift and recession fears will fade. Heidi Scherholz, president of the liberal Economic Policy Institute, said the White House’s analysis was “data driven.”
“People will understand that if we have extremely low unemployment, the idea that we’re in a recession makes no sense,” he said.