Treasury Secretary Janet Yellen and members of the Biden administration are out in force, making the case that the economy is strong and not headed toward a recession. The Commerce Department will release initial GDP calculations Thursday, and some economists predict it will reveal a contraction for the second quarter in a row.
“This is not an economy that’s in recession. But we’re in a period of transition,” Secretary Yellen said. She also pointed to the unemployment rate of 3.6%, which is nearly as low as it’s been in 50 years.
Two consecutive quarters of negative growth is one of the informal definitions of a recession. The economy shrank 1.6% from January to March 2022.
“If you look at the strength of the labor market, if you look at the strength of consumer spending, you would conclude that where we are right now remains solidly within expansion,” White House Economic Adviser Jared Bernstein said. “Based on consumer spending, based on payroll employment, based on where the unemployment rate is, I think we can confidently say that these, these numbers that we’re posting are very much inconsistent with a recessionary call.”
Democrats are trying to get their messaging out ahead of the announcement because the economy, and how it’s perceived, will play a big role in the midterm elections. In a Monmouth University poll out this month, 42% of Americans said they are struggling to remain where they are financially, and 57% said the federal government’s actions have hurt their family’s most important concerns. That sentiment, topped by executives like Tesla CEO Elon Musk and JP Morgan Chase CEO Jamie Dimon saying an economic downturn is coming, is not what Democrats want just before the midterm elections.
“That hurricane is right out there, down the road, coming our way,” Dimon said during a Q&A session at an economic conference. “We just don’t know if it’s a minor one or superstorm Sandy.”
Republicans are trying to use these developments to their advantage.
“So you’ve got families that are having to choose gas or food. You’ve got people putting off their retirement, you’ve got people taking second jobs, people coming out of retirement because they can’t afford this,” Sen. Rick Scott, R-Fla., said.
Only the National Bureau of Economic Research can make an official designation that the economy is in a recession. It defines a recession as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.”
