U.S. President Joe Biden speaks on the Inflation Reduction Act of 2022 at the White House in Washington, U.S., July 28, 2022.
Elizabeth Frantz | Reuters
WASHINGTON – The White House responded to negative GDP growth in the second quarter with a series of events and a well-coordinated message: Despite what everyone is saying, the U.S. economy is not in recession.
Chairperson Joe Biden appeared in public twice on Thursday, and both times he made the same careful remarks, arguing that the current low unemployment rate, coupled with new investments in manufacturing, has caused the economy to decline. The economy cannot fall into recession.
“Let me show you the facts about the state of the economy,” Biden said in a speech seen as a comment on the latest budget bill in Congress. “First, we have a record job market, and a record unemployment rate of 3.6%, and businesses are investing in the US at a record rate.” He then listed several companies with plans to build factories in the US before concluding, “to me, that doesn’t sound like a recession.”
Outside of the White House bubble, however, the latest GDP data looks like a recession.
On Thursday, the Commerce Department’s Bureau of Economic Analysis reported that gross domestic product, the broadest measure of economic activity, down 0.9% in the second quarter.
After falling 1.6% in the first quarter, two consecutive declines meet the most commonly used definition of recession. The official arbiter of recessions, the National Office of Economic Research, may not rule for months.
Later in the day, Biden hosted a roundtable event with five executives from major companies, also aimed at showcasing the strength of the American economy. The leaders of Corning, Marriott International, Bank of AmericaTIAA and Deloitte were both present, with Marriott’s Tony Capuano and Wendell Weeks in attendance.
“There’s going to be a lot of talk today on Wall Street and among experts about whether we’re in a recession,” Biden said in his opening remarks. “But if you look at our jobs market, consumer spending, business investment, we also see signs of economic progress in the second quarter.”
Biden is also quoted Federal Reserve Chairperson Jerome Powellwho said Wednesday he doesn’t believe the economy is currently in recession because “there are too many areas of economic growth where the economy is doing too well.”
What Biden didn’t mention was that Powell was speaking shortly after the Fed announced its second 0.75 percentage point rate hike in months, the first time in the central bank’s modern history that it had there are two interest rate hikes to 3/4 a point back to return.
Biden wasn’t the only protagonist to come out in front of the camera on Thursday to suggest that what the US economy is experiencing is not, in fact, a recession. Minister of the Treasury Janet Yellen held a rare, independent press conference at the Treasury between the two presidential events.
Yellen emphasized that the recession is a “widespread weakening of our economy” that includes significant layoffs, business closures and strain in household finances.
“That’s not what we’re seeing right now,” she said. “When you look at the economy, job creation is continuing, household finances are still strong, consumers are spending and businesses are growing.”
Several other White House officials joined cable shows to make similar arguments, including National Economic Council Director Brian Deese.
Appeared Thursday on CNBC’s “Squawk on the street“Deese said that although the post-pandemic economic boom is slowing, this is not leading to a recession.
“I think if you look at the full data and the kind of data that the NBER looks at, there’s almost nothing to signal that this phase of the second quarter is a recession,” he said, referring to the Office of Research. National economy.
But what individuals believe to be true about the economy can prove to be a stronger economic indicator than what is actually true.
Over the past few months, consumer and business confidence levels have dropped. And Recent surveys shows that the majority of Americans believe the country is in a recession.
This is in large part because soaring inflation has cut deep into the purchasing power of the average American worker’s wage, increased to 9.1% in Juneand economic growth has not kept pace.
Those worried about a recession are likely to curb their household spending and delay major purchases, which in turn could have a negative effect on the economy.
With Democrats facing headwinds in this November’s midterm elections, it’s vitally important to sway individual voters’ opinions on the state of the economy. Biden and his party now if they hope to maintain control of at least one house of Congress.
But with only 13 weeks between now and the November election, it may be too late.
– CNBC’s Jeff Cox contributed to this story.
Correction: National Economic Council Director Brian Deese appeared on CNBC’s “Squawk on the Street.” An earlier version misspelled the name of the program.
