Politics: Biden risks repeating 'transitory inflation' mistake on economy before midterm elections

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The Biden administration said last year that inflation was transitory — before 13 straight months of rising costs cemented the trend. Now, after misreading the threat of inflation, the White House is pushing back against a technical framing of a recession ahead of an expected second straight quarter of economic decline.

But the Biden administration’s efforts to draw lines around what is and isn’t considered a recession may not matter to those feeling the sting of soaring prices.

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“That’s fundamentally what the White House has to grapple with,” said Gordon Gray, a former adviser to GOP Sens. John McCain and Rob Portman (OH) and the fiscal policy director at the American Action Forum, a conservative think tank.

The Bureau of Economic Analysis will release a preliminary estimate Thursday of whether the economy grew or shrank in the year’s second quarter. This number fell over the first quarter, and a consecutive contraction is one indicator of an economic recession.

Economists expect a decline of 1% to 2%, but the White House has mounted a campaign to argue that strong job growth, consumer demand, and private sector investment signal an economy that is not in recession — no matter what the data on Thursday show.

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And while President Joe Biden warned on Monday that the economy would transition from rapid to “steady” growth, he insisted, “We’re not going to be in a recession.”

Officials have also touted reductions in gasoline prices and an effort to lower prescription drugs as measures that could help ease inflationary pressures.

Still, voters remain skeptical of the president’s leadership on economic issues.

A RealClearPolitics average of national polls shows Biden underwater over his handling of the economy, with 32% approval and 64% disapproval.

Asked whether the White House’s pushback over a technical definition “missed the point” of many people’s economic suffering, Biden’s press secretary responded that the administration was working to bring down costs for the public before beating back talk of a recession.

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“We’re just laying out the facts as we’re seeing it, and we’re also pointing to NBER, who actually has the textbook definition,” Karine Jean-Pierre told reporters Wednesday, referring to the National Bureau of Economic Research, a private research organization. “They look at this more broadly.”

The NBER’s Business Cycle Dating Committee tracks the economic cycle’s peaks and troughs. It may eventually declare a recession but won’t do so before several economic indicators say so.

For now, White House officials have pushed firmly back on the claim that two consecutive quarters of economic contraction indicate a recession.

National Economic Council Director Brian Deese said the contraction doesn’t meet the definition of a recession without sweeping job losses, while Treasury Secretary Janet Yellen told Meet the Press over the weekend: “This is not an economy that is in recession.”

Still, during an announcement to raise interest rates on Wednesday, Federal Reserve Chairman Jerome Powell said that while the United States is not currently in a recession, the path to a soft landing had narrowed.

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Despite endeavoring to “prepare the battlefield a little bit,” Gray said the White House would struggle to convince voters that the economy is healthy regardless of where the NBER comes down.

“That’s not wildly convincing if people are feeling like their paychecks are eroding,” he said.

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The outcome could bode a challenge for Biden and Democrats ahead of the November elections, for which an average of congressional ballot surveys suggests a Republican edge.

“What is meaningful for the midterms is do people feel like they’re better or worse off,” Gray added. “Most people don’t even know what the NBER is.”

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Tags: Economy, White House, Biden Administration, Joe Biden, Midterms 2022

Original Author: Katherine Doyle

Original Location: Biden risks repeating 'transitory inflation' mistake on economy before midterm elections

Inflation could cost Biden and the Democrats greatly .
There is a reason President Joe Biden has gone from describing inflation as “transitory” to listing it as his “top domestic priority.” The last time inflation, now running at a 41-year high, was this bad, rising consumer prices helped make the Democrat in the White House a one-term president. Republicans won the next three presidential elections. Biden would like to avoid this fate. It may be too late for the narrow Democratic congressional majorities, especially in the House. Already disfavored due to recent history and redistricting, inflation appears to be the issue most likely to fuel a red wave in November.

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