Biden Rejects Recession Label, Declares Nation ‘On Track’ Despite Shrinking Economy

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WASHINGTON — President Joe Biden on Thursday tried to reassure the American people that the economy was getting back on track as Republicans rushed to new data showing the country’s economy was contracting for the second straight quarter, a common definition of a recession.

Biden touted a new deal with Senator Joe Manchin, TBEN.Va., that could revive his grand plans to fight climate change and cut health care costs while reducing the deficit.

“This bill will ease inflationary pressures on the economy,” he said during comments at the White House.

Biden praised Senate approval of another — and bipartisan — bill to boost computer chip production, a move that could encourage manufacturers to expand their U.S. operations and protect against future chip shortages that have recently contributed to higher prices for cars and other goods.

He has also scheduled a meeting with CEOs to highlight areas where the economy is strong, claiming in a previous statement that the nation is “on the right track.”

After ticking off recent statistics on job creation and business investment, Biden stated in his public remarks, “That doesn’t sound like a recession to me.”

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Republicans disagree and immediately began harassing Biden after the Commerce Department reported a decline in the country’s gross domestic product from April-June.

“Democrats inherited an economy that was poised for a historic comeback, and immediately knocked it down,” said Senate Leader Mitch McConnell, R-Ky.

The Club for Growth, a conservative group promoting small government and low taxes based in Washington DC, quickly dropped an ad criticizing “the Biden recession” that will run in three states with competitive Senate races: Arizona, Nevada and North Carolina.

New GDP figures: The economy shrank 0.9%, marking the second contraction in a row and fueling recession concerns

New rate increase: Fed raises key rate again by 0.75 points.

President Joe Biden speaks on “The Inflation Reduction Act of 2022” in the State Dining Room of the White House in Washington, Thursday, July 28, 2022.

Whether the National Bureau of Economic Research will declare the country in recession remains to be seen.

Biden administration officials spent the days leading up to the announcement arguing that most economic data remains strong, especially the low unemployment rate.

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“We have a very strong labor market,” Treasury Secretary Janet Yellen said on Sunday. “If you create almost 400,000 jobs a month, that’s not a recession.”

That argument was supported Wednesday by Jerome Powell, chairman of TBEN Federal Reserve. After the Fed raised interest rates by a hefty amount for the second month in a row to curb inflation, Powell said there were still too many areas of the economy performing well to send the US into recession.

The Fed has acted aggressively to slow inflation without significantly raising unemployment, something Powell acknowledged has “become more challenging” in recent months.

Being able to use the word “recession” will give Republicans more political firepower in this fall’s midterm elections.

While economists can argue about whether that label is correct, what matters most is voters’ perception of how things are going — and that’s not good.

Half of the 1,000 registered voters polled in a USA TODAY/Suffolk University poll this month said a recession is already underway.

Biden hopes the deal Manchin announced Wednesday will lower the prices of some prescription drugs and help millions of Americans pay their insurance premiums.

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The plan, which Democrats have yet to prove with their tight majorities in both the House and Senate, would also spend hundreds of billions of dollars on clean energy and climate change programs. It would raise taxes on large corporations through a minimum tax and on wealthy individuals through enhanced enforcement, according to Manchin, while reducing the deficit by some $300 billion over a decade. Manchin had pushed for deficit reduction to control spending and curb inflation.

According to the impartial Congressional Budget Office, growing deficits and rising interest rates will push the public’s federal debt to unprecedented levels over the next 30 years.

“Reducing inflation was my main goal,” Manchin said. “And we’ve been working on that.”

Still, House Minority leader Kevin McCarthy, R-Calif., accused the package of “doubling down on the same failed policy” by boosting new spending.

“Wasn’t the worst inflation in years enough?” McCarthy said Thursday.

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This article originally appeared on USA TODAY: As recession fears mount, Biden says economy is improving