Coming on the heels of shrinking 1.6 percent in the first quarter, Thursday’s announcement of a second-quarter shock by the Bureau of Economic Analysis left economic pundits divided, and immediately became a political football, with Democrats suggesting the situation was not grim and painted a positive picture of the overall economy, and portrayed Republican doom and gloom, calling it “Biden recession.”
“We are on the right track and we will come through this transition stronger and more secure,” Biden said in the statement, “It is no surprise that the economy is slowing because federal Reserve Serves to reduce inflation.” He cited strong consumer spending and a low unemployment rate to indicate that the US economy remains strong.
The BLS numbers came a day after the Federal Reserve raised interest rates by .75 percent for the second time this year to tame inflation, which is at a 40-year high in as many weeks. The rise, along with the Russo-Ukraine war and its repercussions, and now GDP numbers, has led many analysts to predict a recession.
But economists are also surprised by the continued strength in the labor market, with unemployment still at record levels and consumer spending still relatively health. Notably, the stock market has also continued to rise after a 20 percent drop in June that meets the definition of a bear market.
Some pundits said the recession was not imminent or that it would be fleeting.
Paul Krugman, Nobel laureate in economics and NYT columnist, said that a “technical recession” does not exist and that “the official definition of a recession is a juridical mixture of changes of levels and rates in several variables, most of which continued to expand over the years.” of the first half.”
Apparently, the only time America was in such “unknown territory”—a six-month contraction without a recession—was in 1947.
Republicans however piled on the Biden dispensation, which is now on the defensive ahead of November’s midterm election, where the House of Representatives and the Senate – both currently under Democratic control – will be up for grabs. If Republicans win one or both, the Biden presidency will face even more trouble in its final two years.