Biden denies talk of recession as key economic report looms
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.
The Commerce Department on Thursday 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 — a recession.
The White House is attempting to redefine that benchmark.
“Two negative quarters of GDP growth is not the technical definition of recession,” National Economic adviser Brian Deese claimed during Tuesday’s White House press briefing.
The president himself 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 Monday. “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 White House published a whole explanation insisting that even if the new data suggest that our country is in recession, we actually won’t be,” Senate Republican Leader Mitch McConnell said in Monday in a speech to the Senate.
“The same people who said inflation wouldn’t happen,” he continued, “are now insisting we aren’t headed into a recession. Draw your own conclusions.”
Not only is the likely GOP message more direct, it also leans into how many Americans feel right now.
A July poll from The Associated Press-NORC Center for Public Affairs Research found that 83% believe the U.S. is going in the wrong direction. That’s a sharp reversal from May of 2021 when 54% said the country was headed in the right direction, a level of approval that overlapped with an increase in vaccinations against COVID-19 and payments flowing from Biden’s $1.9 trillion pandemic relief package.
Separately, the University of Michigan’s index of consumer sentiment is lower now than it was during the worst months of the 2008 financial crisis, an epic recession that involved the crash of the housing and stock markets and required a burst of government aid.
The negativity has left the Biden administration trying to make the case that things are better than people think. Administration officials say the GDP report won’t tell the whole story.
Still, 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.