But Republicans are ready to brush aside all economic formalities and bash Democratic candidates in the midterm election over an already-existing economy deeply unpopular with voters in both parties seeing the prices of gas, groceries, travel and just about everything else rise 9 percent, much faster than their own wages. New inflation data arrive on Friday.
Many economists agree that this post-pandemic period doesn’t meet many criteria for a recession, a politically charged word with no precise definition. Recessions are generally only explained by the National Bureau of Economic Research, a private research group — often after the decline is over.
The unemployment rate is near record lows. Job vacancies remain high and consumer spending is still fairly strong, undermining the notion that we are in a recession. And the negative first-quarter numbers were heavily skewed by technical factors in inventory and trading.
Nevertheless, Biden’s approval ratings for the economy are already correct only fluctuate by 30 percent and could now sink even lower, anchoring the economy as a dead weight for Democrats who are already widely expected to suffer significant losses in the midterm elections, particularly in the House of Representatives.
“It’s too bad the White House doesn’t have a vaccine for denial,” Rep said. Kevin Brady of Texas, the top Republican on the House Ways and Means Committee, told POLITICO this week. “The question is not whether we have a recession. The question is how hard and how long will it take.”
“While the White House can certainly argue that two quarters of negative growth alone does not necessarily mean the economy is in recession, this is politically difficult and highly technical to argue. And Democrats are already facing strong headwinds for the fall election in the form of rising inflation, a Federal Reserve poised to raise interest rates to curb demand and lower prices, and an electorate The nation remains deeply sour about the state of the economy and the direction of the economy.
The report on second quarter growth, subject to a first revision next month, showed declines in private inventory investment, residential fixed investment, federal government spending, state and local government spending and non-residential fixed investment. The declines were partially mitigated by increases in exports and personal consumption spending, the Commerce Department said.
Imports, which subtract from GDP, increased.
The report comes after the Fed on Wednesday drove up interest rates by another hefty three-quarters point, that’s a belt-tightening campaign is already showing signs of a slowdown in consumer demand for large objects such as houses and cars. The impact of rate hikes is expected to increase as the year progresses, putting further pressure on growth.
Fed Chair Jerome Powell said at his press conference on Wednesday that he doesn’t think the economy is in recession as there are strengths other than GDP growth. But he said the path to reducing inflation without slipping into recession is becoming narrower.
And White House officials recognize that changing people’s minds about the economy is a daunting task as the highest inflation in four decades is weighing heavily on wages.
“I don’t think any of us are trying to convince anyone that their feelings about the economy are wrong,” Jared Bernstein, a member of the Council of Economic Advisers and one of Biden’s senior advisers, told POLITICO this week. “We try to explain things in a much more nuanced way than most people get from the daily news flow.”
Biden touts record jobs but faces new headwinds as GDP shrinks
Source link Biden touts record jobs but faces new headwinds as GDP shrinks