GDP slips 0.9% for second straight quarterly decline—Biden, Yellen deny US recession

According to the Bureau of Economic Analysis, US GDP, or gross domestic product, shrank by 0.9% in the second quarter. To tackle inflation and decrease the chances of a recession, the Federal Reserve increased its interest rate again by 0.75%. There have been two consecutive quarters with a decrease in GDP, which is the ‘technical’ definition of a recession. In the first quarter, GDP fell 1.6%. However, June saw the addition of 372,000 jobs, a sign of the economy’s resilience.

In a press conference yesterday, President had this to say, “There are going to be a lot of chatter today on Wall Street and among pundits about whether we are in a recession,” Biden said. “But if you look at our job market, consumer spending, business investment, we see signs of economic progress in the second quarter as well.”

GDP is not the only determining factor for a recession. “GDP alone is not how you determine a recession,” Austin Clemens at the Washington Center for Equitable Growth to Marketplace. “We have high inflation, but we have a very strong job market. We have — it looks like — negative GDP growth, but also still pretty robust consumer spending.”

Since there is low unemployment and robust consumer spending, Biden denies that the US economy is in a recession. Instead, he is focusing on bringing down inflation. “Coming off of last year’s historic economic growth – and regaining all the private sector jobs lost during the pandemic crisis – it’s no surprise that the economy is slowing down as the Federal Reserve acts to bring down inflation,” Biden said.

Secretary Janet Yellen agreed in a news conference stating, “When you look at the economy, job creation is continuing, household finances remain strong, consumers are spending and businesses are growing,” she said during a news conference.

Democratic Senator Joe Manchin of West Virginia and Senate Majority Leader Chuck Schumer reached a deal with a new bill to fight increasing health care costs, inflation, and climate change.

Manchin will cast his vote for the Inflation Reduction Act of 2022. He stated, “We must be honest about the economic reality America now faces if we want to avoid fanning the flames of inflation. At its core, the purpose of reconciliation is to get our economic and financial house in order.”