World: What's inside the Dems reconciliation bill, Biden denies recession and more: Friday's 5 things to know

Psaki says White House has been preparing for Biden's eventual COVID diagnosis for MONTHS

  Psaki says White House has been preparing for Biden's eventual COVID diagnosis for MONTHS Former White House Press Secretary Jen Psaki weighed in on what the White House needs to do to prevent worry over President Joe Biden's COVID diagnosis on MSNBC on Thursday.Calling into the network on Thursday following news of Biden's positive diagnosis, Psaki said the White House had long been bracing for an eventual COVID infection from the president.

Here are five key things that could impact Friday's trading.

OUTLINE UNVEILED: Senate Majority Leader Chuck Schumer, D-N.Y., and Sen. Joe Manchin, D-W.Va., unveiled the outline of a new tax, climate and health care proposal on Wednesday, a stunning reversal that marks a major breakthrough for President Biden's long-stalled economic agenda.

The reconciliation bill — repackaged by Democrats as the Inflation Reduction Act of 2022 — would raise an estimated $739 billion over the next decade, with the revenues going toward initiatives designed to combat climate change and curb pharmaceutical prices, as well as efforts to reduce the nation's $30 trillion debt.

Paul Krugman insists 'we won't be' in a recession after admitting he was wrong to dismiss inflation concerns

  Paul Krugman insists 'we won't be' in a recession after admitting he was wrong to dismiss inflation concerns New York Times columnist Paul Krugman is making yet another bold prediction about the economy after his two previous declarations did not come to fruition.In his piece Tuesday attempting to explain what a recession is, Krugman began by acknowledging "there’s a pretty good chance" that data set to be released on Thursday will show the GDP had shrunk for two consecutive quarters, which has long been an indicator of a recession.

It includes about $433 billion in new spending, while roughly $300 billion of the new revenue raised would go toward paying down the nation's deficit — a priority for Manchin.

MANCHIN AGREES TO EXTENSION OF TAX CREDIT FOR ELECTRIC VEHICLE PURCHASES IN REVERSAL

While the bill's future remains uncertain in the 50-50 Senate, if passed it would amount to one of the largest tax hikes in decades. Still, it's a far cry from the ambitious $3 trillion agenda that Biden rolled out last year that relied on major tax increases on wealthy Americans and corporations — and that Manchin subsequently killed.

The legislation would impose a 15% minimum tax on the book income of corporations. The tax would hit the profit that corporations publicly report on their financial statements to shareholders.

Is This a Recession? Wrong Question.

  Is This a Recession? Wrong Question. It’s the numbers that matter, not the nomenclature.

Under the bill, the government would have the power to negotiate with drugmakers in order to lower prices for certain prescription drugs. The proposal would cap what seniors on Medicare pay out of pocket for drugs each year at $2,000.

If pharmaceutical companies raise the prices of their drugs more than the rate of inflation, pharmaceutical companies would be required to rebate Medicare.

The Internal Revenue Service would receive $80 billion in order to enhance tax enforcement by hiring more agents and introducing new technology to pursue tax dodgers.

The plan from Manchin and Schumer would repeal the break for carried interest, which allows private equity fund managers to pay lower taxes on their earnings than they would for regular income. The loophole allowed for part of an investment manager's income to be taxed as a capital gain — a 23.8% levy — rather than regular income.

What will cause US to go into a deep recession? Harvard economist weighs in

  What will cause US to go into a deep recession? Harvard economist weighs in Harvard University economics professor Kenneth Rogoff discussed what would lead to a deep recession as data revealed a contraction in the U.S. economy in the second quarter.Speaking on "Mornings with Maria" Thursday after data revealed a contraction in the U.S. economy in the second quarter, the Harvard economist warned that "the odds of a recession, if we’re not in one, are very, very high.

BIDEN: ‘NOT IN A RECESSION’: President Biden said the United States "is not in a recession," despite Thursday's GDP report, saying it is "no surprise that the economy is slowing down" amid inflation.

The U.S. economy shrank in the spring for the second consecutive quarter, meeting the criteria for a recession as record-high inflation and higher interest rates forced consumers and businesses to pull back on spending.

Gross domestic product, the broadest measure of goods and services produced across the economy, shrank by 0.9% on an annualized basis in the three-month period from April through June, the Commerce Department said in its first reading of the data on Thursday. Refinitiv economists expected the report to show the economy had expanded by 0.5%.

"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 Thursday in a statement. "But even as we face historic global challenges, we are on the right path and we will come through this transition stronger and more secure."

New York Times column claims we are not in a recession, news on inflation is ‘encouraging’

  New York Times column claims we are not in a recession, news on inflation is ‘encouraging’ A New York Times column by Paul Krugman argued there was positive news regarding inflation and the U.S. economy is not currently experiencing a recession.Krugman argued two consecutive quarters of negative growth do not equate to the "technical" or "official" definition of the term, asserting instead that the determination lies with the Business Cycle Dating Committee.

US ECONOMY ENTERS TECHNICAL RECESSION AFTER GROWTH TUMBLES 0.9% I THE SECOND QUARTER

After the U.S. economy shrank in the second quarter, a sign the economy is in a recession, President Biden continues to insist there is no recession. AP Photo/Andrew Harnik © AP Photo/Andrew Harnik After the U.S. economy shrank in the second quarter, a sign the economy is in a recession, President Biden continues to insist there is no recession. AP Photo/Andrew Harnik

Biden touted the job market, saying it "remains historically strong, with unemployment at 3.6% and more than 1 million jobs created in the second quarter alone."

"Consumer spending is continuing to grow," he said.

Biden said he met with the chairman of SK Group from Korea earlier this week, saying it is "just one of the companies investing more than $200 billion in American manufacturing since I took office, powering a historic recovery in American manufacturing."

"My economic plan is focused on bringing inflation down, without giving up all the economic gains we have made," he said. "Congress has an historic chance to do that by passing the CHIPS and Science Act and Inflation Reduction Act without delay."

Biden's comments came just days after he said the U.S. was "not coming into recession."

"We're not coming into recession, in my view," Biden said Monday. "I don't think we're going to — God willing — I don't think we're going to see a recession."

Recessions typically refer to two consecutive quarters of negative economic growth.

Manchin REJECTS claim that Democrats' spending bill hikes taxes, vows to speak with Kyrsten Sinema

  Manchin REJECTS claim that Democrats' spending bill hikes taxes, vows to speak with Kyrsten Sinema A study by the Joint Committee on Taxation found that taxpayers bringing in less than $200,000 per year would see their taxes raised by $16.7 billion over a decade.'Agree to disagree,' Manchin said when asked about the nonpartisan study shared by Republicans on the Senate Finance Committee on Saturday.

STILL MORE ECONOMIC DATA: A busy week for macroeconomic data ends with a flourish on Friday when the first of four reports are released.

At 8:30 a.m. ET, the Commerce Department releases personal income and spending numbers for June. Economists surveyed by Refinitiv anticipate spending to rise 0.9% month-over-month, well above May’s 0.2% growth. Personal income, meantime, is expected to rise 0.5% in June, matching May’s gain. Core personal consumption expenditures, which remove volatile food and energy prices, are seen rising 0.5% month-over-month, higher than May’s 0.3% increase.

The year-over-year change in core PCE, which is the Federal Reserve’s preferred measure of inflation, is expected to hold steady at 4.7%. That’s down from a 39-year high of 5.3% in February and would support the view that inflation has peaked.

Still, it would also mark the 15th consecutive month that inflation was above the Fed’s 2% target and could boost expectations for a third 75-basis point rate hike at the Fed’s September policy meeting.  Futures currently indicate a 100% chance for a 50-basis point hike, with a 24% chance for a 75-basis point increase.

Also scheduled for release at that time is the Employment Cost Index. It’s expected to jump 1.2% in the second quarter, down from a larger-than-expected increase of 1.4% in the first quarter, a level not seen since the second-quarter of 1990.

The Commerce Department is scheduled to release personal income and spending numbers for June on Friday, July 29, 2022. Economists surveyed by Refinitiv anticipate spending to rise 0.9% month-over-month, well above May’s 0.2% growth. Jeffrey Greenberg/UCG/Universal Images Group via Getty Images © Jeffrey Greenberg/UCG/Universal Images Group via Getty Images) The Commerce Department is scheduled to release personal income and spending numbers for June on Friday, July 29, 2022. Economists surveyed by Refinitiv anticipate spending to rise 0.9% month-over-month, well above May’s 0.2% growth. Jeffrey Greenberg/UCG/Universal Images Group via Getty Images

The ECI is considered the most comprehensive gauge of labor costs. Another higher-than-expected reading could add to inflation fears and put pressure on bonds and stocks.

New York Times' Paul Krugman mocked for claiming the economy is experiencing a 'Biden Boom'

  New York Times' Paul Krugman mocked for claiming the economy is experiencing a 'Biden Boom' Paul Krugman faced criticism on Twitter for arguing that the economy is experiencing a "Biden boom" despite the country being in a recession and record high inflation."Since I get lots of mockery for having talked about a "Biden boom", I thought I'd share a chart," Krugman tweeted.

Then, at 9:45 a.m. ET, the Institute for Supply Management is out with its Chicago Purchasing Managers’ index for July. The closely watched gauge of Midwest business activity is anticipated to fall for the third time in four months to 55.0, the lowest since August 2020. Recall that 50 is the dividing line between expansion and contraction. The report is seen as a curtain-raiser to the all-important national ISM number out on Monday.

Finally, at 10 a.m. ET, watch for the University of Michigan’s final index of consumer sentiment for July. It’s expected to hold steady at the preliminary reading of 51.1, which was up slightly from a record low of 50.0 in June when record-high gasoline prices drove inflation fears.

EARNINGS REPORTS GALORE: The busiest week for second-quarter earnings wraps up Friday morning with a big focus on energy.

Among those releasing reports are integrated oil and gas giants ExxonMobil and Dow member Chevron, along with refiner Philips 66.

In addition, watch for numbers from another Dow company, personal-care products maker Procter & Gamble.

Also reporting results will be be biotech firm AbbVie, cable and satellite giant Charter Communications, household products maker Colgate-Palmolive and consumer goods manufacturer Newell Brands

A little more than half the companies in the S&P 500 have reported quarterly results.

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SPIRIT CHOOSES JETBLUE: Spirit Airlines climbed $1.36, or 5.6%, to $25.66 after JetBlue Airways agreed to buy the carrier. The deal came after The Wall Street Journal reported that the two sides were close to sealing an agreement following a months long bidding war between JetBlue and Frontier Group Holdings. JetBlue dropped 3 cents, or 0.4%, to $8.37.

Biden comeback? Media hypes 'success' following Schumer-Manchin deal while Sinema has yet to back climate bill .
News outlets have begun pushing the narrative that President Biden is "back in the game" following months of dismal polling and reports that Democrats don't want him to run in 2024.Ever since the chaotic military withdrawal from Afghanistan, Biden's polling has plummeted and issues continued mounting from inflation, soaring gas prices, the supply chain crisis, the baby formula shortage, spikes in crime, the overflow of migrants at the southern border, the lingering COVID pandemic and now a recession all while his progressive agenda had stalled on Capitol Hill.

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