The White House goes on the offensive when arguing that the US is not in a recession

The White House goes on the offensive when arguing that the US is not in a recession

US President Joe Biden delivers a speech on the 2022 Inflation Reduction Act at the White House on July 28, 2022 in Washington, United States.

Elisabeth Franz | Reuters

WASHINGTON – The White House responded to negative second-quarter GDP growth with a slew of events and a well-coordinated message: Despite what everyone is saying, the US economy is not in recession.

President Joe Biden made two public appearances Thursday, and both times he made the same carefully crafted remarks in which he asserted that current low unemployment rates combined with new investment in manufacturing make a recession in the economy impossible.

“Let me just give you the facts regarding 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 companies are investing at record rates in America.” He then listed several companies planning to build factories in the US before concluding, “This doesn’t sound like a recession to me.”

Outside of the White House bubble, however, recent GDP data sounded 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 contracting 1.6% in the first quarter, the two straight declines fit the most commonly used definition of a recession. The official recession arbiter, the National Bureau of Economic Research, is unlikely to govern for months.

Later in the day, Biden held a roundtable with five CEOs from major companies, also aimed at demonstrating the strength of the American 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 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 job market, consumer spending and business investment, we continue to see signs of economic progress in the second quarter.”

Biden also quoted Federal Reserve Chair Jerome Powell as saying Wednesday he doesn’t think the economy is in recession right now because “there are too many areas of economic growth where the economy is doing too well.” .

What Biden failed to mention was that Powell was speaking shortly after the Fed announced a second 0.75 percentage point rate hike in as many months, the first time in the central bank’s modern history that it had two three-quarters-a-point rate hikes Back to back.

Biden wasn’t the only major figure who took to the cameras Thursday to claim that what the US economy is experiencing is not actually a recession. Treasury Secretary Janet Yellen held a rare, standalone press briefing at the Treasury Department between the President’s two events.

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Yellen insisted that a recession is a “general weakening of our economy” that includes significant layoffs, business closures and strains on household finances.

“That’s not what we’re seeing right now,” she said. “If you look at the economy, jobs continue to be created, household finances remain strong, consumers are spending and businesses are growing.”

Several other White House officials went on cable news programs to make similar arguments, including National Economic Council director Brian Deese.

Appearing Thursday on CNBC’s “Squawk on the Street,” Deese said that while the economic boom has slowed in the wake of the pandemic, it hasn’t translated into a recession.

“I think if you look at the full data and the type of data that NBER is looking at, there’s practically nothing to suggest that this period is recessionary in the second quarter,” he said, citing the National Bureau of Economic Research .

But what individuals believe to be true about the economy could prove to be a stronger economic indicator than what is actually true.

Consumer and business confidence have plummeted in recent months. And recent polls show that a solid majority of Americans believe the country is in recession.

This is in large part because rising inflation has severely impacted the purchasing power of the average American worker’s paycheck, rising to 9.1% in June, and economic growth has lagged behind.

People worried about a recession are likely to cut household spending and delay making major purchases, which in turn can have its own negative impact on the broader economy.

With Democrats already facing headwinds in November’s midterm elections, swaying individual voters’ opinions about the state of the economy is crucial for Biden and his party if they hope to gain control of at least one chamber of Congress to keep.

But with just 13 weeks until the November elections, it could already be too late.

CNBC’s Jeff Cox contributed to this story.

Correction: Brian Deese, director of the National Economic Council, appeared on CNBC’s “Squawk on the Street.” A previous version specified the name of the program incorrectly.

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