U.S. President Joe Biden delivers remarks on the Inflation Reduction Act of 2022 on the White House in Washington, U.S., July 28, 2022.
Elizabeth Frantz | Reuters
WASHINGTON — The White House responded to second-quarter negative GDP growth with a full slate of events and a well-coordinated message: Despite what everyone seems to be saying, the U.S. economy is just not in a recession.
President Joe Biden appeared in public twice Thursday, and each times he delivered the identical rigorously crafted remarks, contending that current low unemployment rates, coupled with latest investments in manufacturing, make it not possible for the economy to be in a recession.
“Let me just offer you what the facts are by way of the state of the economy,” Biden said in a speech that was billed as remarks on the newest budget bill in Congress. “Primary, we’ve got a record job market, and record unemployment of three.6%, and businesses are investing in America at record rates.” He then listed several corporations planning to construct factories within the U.S. before concluding, “that does not sound like a recession to me.”
Outside the White House bubble, nevertheless, the newest GDP data sounded lots like a recession.
On Thursday, the Commerce Department’s Bureau of Economic Evaluation reported that gross domestic product, the broadest measure of economic activity, fell 0.9% within the second quarter.
Coming on the heels of a 1.6% contraction in the primary quarter, the 2 straight declines meet essentially 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 within the day, Biden held a roundtable event with five chief executives of major corporations, also geared toward showcasing the strength of the American economy. The leaders of Corning, Marriott International, Bank of America, TIAA and Deloitte were all present, with Marriott’s Tony Capuano and Corning’s Wendell Weeks attending in person.
“There’s gonna be a number of chatter today on Wall Street and amongst pundits about whether we’re in a recession,” Biden said in his opening remarks. “But in case you take a look at our job market, consumer spending, business investment, we see signs of economic progress within the second quarter, as well.”
Biden also quoted Federal Reserve Chairman Jerome Powell, who said Wednesday that he didn’t consider the economy was currently in a recession because “there are too many areas of economic growth where the economy is performing too well.”
What Biden didn’t mention was that Powell was speaking moments after the Fed announced a second 0.75 percentage point rate hike in as many months, the primary time in the trendy history of the central bank that it has had two rate increases of three-quarters of some extent back to back.
Biden was not the one major figure who went before the cameras Thursday to contend that what the U.S. economy is experiencing is just not, in reality, a recession. Treasury Secretary Janet Yellen held a rare, stand-alone news conference on the Treasury in between the president’s two events.
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Yellen insisted that a recession is a “broad-based weakening of our economy” that features substantial layoffs, business closures and strains in household funds.
“That is just not what we’re seeing without delay,” she said. “While you take a look at the economy, job creation is continuous, household funds remain strong, consumers are spending and businesses are growing.”
Several other White House officials went on cable news shows to make similar arguments, including National Economic Council Director Brian Deese.
Appearing Thursday on CNBC’s “Squawk on the Street” Deese said that although the post-pandemic economic boom was slowing, this didn’t amount to a recession.
“I feel in case you take a look at the full data and the style of data that NBER looks at, virtually nothing signals that this era within the second quarter is recessionary,” he said, referring to the National Bureau of Economic Research.
But what individuals consider to be true concerning the economy could prove to be a more powerful economic indicator than what is definitely true.
Prior to now few months, consumer and business confidence levels have plunged. And recent surveys show that a solid majority of Americans consider the country is in a recession.
That is largely because soaring inflation has cut deep into the buying power of the common American employee’s paycheck, rising to 9.1% in June, and economic growth has didn’t sustain.
People who find themselves fearful a few recession are prone to rein of their household spending and delay major purchases, which in turn can have its own negative ripple effect throughout the economy.
With Democrats already facing headwinds on this November’s midterm elections, swaying individual voters’ opinions concerning the state of the economy is critically necessary for Biden and his party to do without delay in the event that they hope to take care of control of at the very least one chamber of Congress.
But with just 13 weeks between now and the November elections, it could 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 misstated the name of this system.