WASHINGTON – President Joe Biden tried to emphasize the positive on Thursday as Republicans pressed new data showing the nation’s economy shrank for a second straight quarter, the usual definition of a recession.
Sen. Biden. Joe Manchin, DW.Va. plan to strike a new deal with the U.S. that could revive his ambitious plans to fight climate change by cutting the deficit and cutting health care costs.
It also plans to meet with CEOs to emphasize areas where the economy is strong.
“Although we face historic global challenges, we are on the right track and will emerge from this transition stronger and safer,” Biden said in a statement.
Republicans immediately began bashing Biden after the Commerce Department reported a decline in the country’s gross domestic product from April-June.
“Democrats inherited an economy that was primed for a historic comeback, and immediately ran it right into the ground,” said Senate Minority Leader Mitch McConnell.
Club for Growth, a conservative group that promotes smaller government and lower taxes, based in Washington DC. Advertisement omitted Criticizing the “Biden slump” that will play out in three states with competitive Senate races: Arizona, Nevada and North Carolina.
New GDP numbers:The economy shrank 0.9%, marking the second straight contraction and raising fears of a recession.
New Rate Increase:The Fed hikes the key interest rate by 0.75 basis points.
Whether the National Bureau of Economic Research will declare the nation in recession remains to be seen.
Biden administration officials spent the days leading up to the announcement arguing that most economic data was strong, particularly the low unemployment rate.
“We have a very strong labor market,” Treasury Secretary Janet Yellen said Sunday. “When you create about 400,000 jobs a month, that’s not a recession.”
That argument was backed up Wednesday by independent Federal Reserve Chairman Jerome Powell. After the Fed raised interest rates sharply for the second month in a row to curb inflation, Powell said too many sectors of the economy were still doing well for the US to be in recession.
The Fed is moving aggressively to slow inflation without significantly increasing unemployment, something Powell acknowledged has “become more challenging in recent months.”
Being able to use the word “recession” gives Republicans more political power heading into this fall’s midterm elections.
While economists can debate whether that label is correct, what matters most is voters’ perception of how things are going—and it’s not good.
Half of the 1,000 registered voters surveyed this month in a USA Today/Suffolk University poll said a recession has already arrived.
Biden hopes the deal Manchin announced Wednesday will lower the cost of some prescription drugs and help millions of Americans pay their insurance premiums.
The plan, which Democrats still have to prove they can pass with their narrow majorities in both the House and Senate, would also dedicate hundreds of billions of dollars to clean energy and climate change programs. It would raise taxes on large corporations through the minimum tax and on wealthy individuals through beefed-up enforcement, according to Manchin, while reducing the deficit by about $300 billion over 10 years. Manchin insisted on reducing the deficit to help rein in inflation.
“Reducing inflation was my number one goal,” Manchin said. “And we’ve worked on it.”
Still, House Minority Leader Kevin McCarthy, R-Calif., charged that the package amounts to “doubling down on the same failed policies” by forcing new spending.
“Wasn’t the worst inflation for years enough?” McCarthy said Thursday.
New Deal?:As the window closes, Sen. Joe Manchin, Senate Leader Schumer deals on energy, drug prices, taxes