The White House is offended by claiming that the United States is not in a recession
U.S. President Joe Biden delivers a speech on the Cut Inflation Act of 2022 at the White House in Washington, U.S., July 28, 2022.
Elizabeth Frantz | Reuters
WASHINGTON — The White House responded to negative second-quarter GDP growth with a comprehensive list of events and a well-coordinated message: Despite what everyone is saying, the US economy is not in recession.
President Joe Biden appeared in public twice on Thursday, and both times delivered the same carefully crafted remarks, saying that current low unemployment rates, coupled with new investment in manufacturing, are keeping the economy from growing. to be in a recession.
“Let me just give you the facts in terms of the state of the economy,” Biden said in a speech billed as remarks 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 America at record rates.” He then listed several companies planning to build factories in the United States before concluding, “this doesn’t look like a recession to me.”
Outside of the White House bubble, however, the latest GDP data looked a lot like a recession.
On Thursday, the Commerce Department’s Bureau of Economic Analysis reported that gross domestic product, the broadest measure of economic activity, fell 0.9% in the second quarter.
After a contraction of 1.6% in the first quarter, the two consecutive declines correspond to the most commonly used definition of a recession. The official arbiter of recessions, the National Bureau of Economic Research, likely won’t rule for months.
Later in the day, Biden hosted a roundtable with five big business CEOs, also aimed at showing the strength of the US economy. Executives from Corning, Marriott International, Bank of America, TIAA and Deloitte were all in attendance, with Marriott’s Tony Capuano and Corning’s Wendell Weeks attending in person.
“There’s going to be a lot of talk today on Wall Street and among pundits about whether we’re in a recession,” Biden said in his opening remarks. “But if you look at our labor market, consumer spending, business investment, we’re also seeing signs of economic progress in the second quarter.”
Biden also quoted Federal Reserve Chairman Jerome Powell, who said Wednesday that he doesn’t believe the economy is currently in a recession because “there are too many areas of economic growth where the economy is working too well. “.
What Biden failed to mention is that Powell was speaking moments after the Fed announced a second rate hike of 0.75 percentage points in as many months, the first time in the modern history of the Fed. central bank that it had two back-to-back three-quarters point rate hikes.
Biden wasn’t the only major figure to come before the cameras Thursday to argue that what the US economy is experiencing is not, in fact, a recession. Treasury Secretary Janet Yellen held a rare stand-alone press conference at the Treasury between the two President’s events.
Yellen insisted that a recession is a “widespread weakening of our economy” that includes major layoffs, business closures and strains in household finances.
“That’s not what we’re seeing right now,” she said. “When you look at the economy, job creation continues, household finances remain strong, consumers are spending and businesses are growing.”
Several other White House officials appeared on cable news shows to make similar points, including National Economic Council Director Brian Deese.
Appearing on CNBC’s “Squawk on the Street” on Thursday, Deese said that while the post-pandemic economic boom was slowing, it did not constitute a recession.
“I think if you look at the full data and the type of data that the NBER looks at, there’s virtually no indication that this period of the second quarter is in a recession,” he said, referring to the National Bureau of Economics. Research.
But what people believe to be true about the economy may turn out to be a more powerful economic indicator than what is actually true.
In recent months, consumer and business confidence levels have plunged. And recent polls show that a solid majority of Americans think the country is in a recession.
This is largely because soaring inflation has deeply reduced the purchasing power of the average American worker’s wages, reaching 9.1% in June, and economic growth has not kept pace.
People who worry about a recession are likely to curb household spending and delay major purchases, which can have its own negative ripple effect on the broader economy.
With Democrats already facing headwinds in November’s midterm elections, it’s critically important for Biden and his party to sway individual voters’ views on the state of the economy right now. ‘they hope to retain control of at least one chamber of Congress.
But with just 13 weeks between now and the November election, it may already 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 had an error in the program name.