COMMON REFRAIN
Recession ‘is not inevitable,’ White House says — again and again
WASHINGTON » Key members of the Biden administration on Sunday stressed their message that “a recession is not inevitable,” despite growing fears that the Federal Reserve’s aggressive actions to curb inflation could trigger an economic downturn.
“I don’t think a recession is at all inevitable,” Treasury Secretary Janet Yellen said on ABC News’s “This Week,” though she acknowledged that she expected some economic slowing. “Clearly, inflation is unacceptably high. It’s President Biden’s top priority to bring it down.”
Yellen noted that Federal Reserve Chair Jerome Powell has pledged to control inflation while maintaining a robust job market. “That’s going to take skill and luck,” she said. “But I believe it’s possible.”
Still, the rising prices of essential consumer goods, gas and housing have squeezed Americans’ budgets. The burden has fallen disproportionately on the working class and the lower middle class, with many people in these groups already living paycheck to paycheck.
The downturn in the stock market, while not an indicator of the health of the economy, has also reflected these concerns. Last week, the major indexes slipped into bear market territory, down more than 20 percent from their highs. That is affecting investors’ psychology and retirement outlook.
The Fed has aggressively increased interest rates in recent months to slow the rate of inflation, which hit a new peak in May. On Wednesday, the Fed hiked interest rates by three-quarters of a percentage point, the highest such increase since 1994. In May, Fed leaders hiked interest rates by half a percentage point.
Yellen cited the war in Ukraine and supply chain issues caused by corona virus related lock down sin China as primary drivers of inflation.
Economists outside the administration have pointed to government spending via the $1.9 trillion American Rescue Plan signed by President Joe Biden in March 2021 as partly responsible for rising prices. Republican critics see the relief plan as a political liability for the president and the Democratic Party ahead of the 2022 midterm elections.
In an interview with the Associated Press on Thursday, Biden pushed back against those blaming his administration for the high inflation, noting that it is an economic reality across the globe. He also said the United States is in a stronger position than other countries to combat inflation.
A recession is “not inevitable,” he said.
Energy Secretary Jennifer Granholm said on CNN’s “State of the Union” on Sunday that Biden was weighing whether to call for a federal gas tax holiday, which would give drivers relief at the pump, but she noted that revenue from the tax is used to improve roads.
“Inflation, obviously, is happening globally,” Granholm said. But “a recession is not inevitable,” she added.