US Recession: Multiple US officials have downplayed rising recession fears, saying a downturn in the world’s largest economy is unlikely given the very tight labor markets.
President Joe Biden said Monday he does not expect the United States suffer an economic downturn, although GDP figures due later this week may show the economy shrinking for a second consecutive quarter.
“We’re not going to be in a recession in my view,” Biden told reporters.
The employment rate is still one of the lowest we’ve had in history. It’s in the 3.6 (percent) area. We still find ourselves, the people, investing.”
“My hope is we go from this rapid growth to a steady growth. And so, we’ll see some coming down. But I don’t think we’re going to — God willing — I don’t think we’re going to see a recession,” he continued.
Citing strong employment figures, the president said he hoped instead for a soft landing where “we go from this rapid growth to steady growth.”
The US is expecting a number of key economic reports this week aside from the second quarter GDP numbers coming Thursday, including Tuesday’s consumer confidence survey and Friday’s Personal Consumption Expenditure index. The Federal Reserve also meets on Wednesday to discuss interest rates.
Top Biden administration officials continue to insist the economy is not in recession amid widespread inflation.
The US Commerce Department is scheduled to report second quarter GDP on Thursday, and economists polled by Reuters forecast a gain of just 0.5%, with 28% of the 78 respondents predicting a contraction.
After a 1.6% annualized drop in first-quarter GDP, a negative second quarter result would likely prompt critics of President Joe Biden to declare a US recession under a traditional shorthand measure used by economists, journalists and analysts — two consecutive quarters of decline.
But Ben Harris, Treasury assistant secretary for economic policy, and Neil Mehrotra, deputy assistant secretary for macroeconomics, wrote that gross domestic income (GDI), which measures aggregate income — wages, business profits, rental, and interest income — continued to rise in the first quarter at a 1.8% annual pace, while GDP fell.
The Biden administration has been grappling with high inflation for months, with the Russian invasion of Ukraine earlier this year injecting uncertainty into global supply chains.
Biden and his team have argued they are hoping to transition the economy from the rapid growth out of the valley of the coronavirus pandemic to a more stable trend of growth as things stabilize and many Americans return to some semblance of normalcy.
While first quarter GDP, which only counts final goods, was negative, they said a 2% increase in real gross output for the period was the result of the economy producing more “stuff,” but more of this went into intermediate goods not counted in GDP.
Their comments came a day after US Treasury Secretary Janet Yellen said a second quarter GDP contraction would not signal recession because of underlying job market strength, demand, and other indicators of economic health.
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