Biden Administration Downplays Recession Warnings as Midterms Approach

The Biden administration continues to play down the possibility of the US facing a recession in the near future amid warnings that the process may kick off in just a matter of months.

Earlier this week, White House press secretary Karine Jean-Pierre told a US broadcaster that “there are no meetings or anything happening like that in preparing for a recession because […] look, what we’re seeing right now is a strong labor market.”

The view was shared by White House Chief of Staff Ron Klain, who claimed in an interview with the same broadcaster that the US is “not in a recession” and that he wants “to be really, really clear on that.”

President Joe Biden, however, was not that optimistic as he told another US media outlet in mid-October that there could be a “very slight recession” in his country.

Economy

US Consumer Confidence Hits 3-Month Low, Raising Recession Concerns

25 October 2022, 16:51 GMT

.“It is possible. Look, it’s possible. I don’t anticipate it,” POTUS said, in what reflected his remarks made in April. At the time, he admitted that he was “concerned” over predictions by “some” that “there may be recession in 2023.”

In a separate development in October, a US news channel cited former Treasury Secretary Larry Summers as saying that next year may see America being in the grip of a recession.

“I think it's more likely than not that sometime in the next year or 18 months we will have a recession. I think that's a consequence of the excesses that the economy has been through, and historical experience suggests that the kind of inflation we have rarely returns to normal levels, to target levels of around 2 percent without some kind of recession,” he argued.

The remarks came as a US media outlet published a spate of economics-related projections, which indicated that America would almost surely be in a recession within the following 12 months. A probability model compiled by the outlet’s economists gave a 100 percent chance of an economic downturn in the US by October 2023.

This was echoed by a New York-based independent consumer financial services company, which quoted their third-quarter economic indicator as showing that there is a 65% percent chance of recession in America within the next 12 to 18 months.

Similar forecasts were made in a survey of economists conducted by the Wall Street Journal in mid-October. The poll revealed that the respondents put the probability of a US recession in the next 12 months at 63%, up from 49% in July. The economists also said that they expected the country’s GDP to shrink over the first six months of 2023, something that is a generally considered definition of a recession.

The chief executives of the US major banks Goldman Sachs and JPMorgan, for their part, said that they expect the recession in the US in the coming months amid the Federal Reserve's attempts to tackle the country’s soaring inflation.

Economy

S&P Ratings Predicts 'Shallow Recession' in US if Global Woes Persist

12 October 2022, 19:00 GMT

JPMorgan's CEO Jamie Dimon suggested that runaway inflation, the Federal Reserve’s aggressive strategy of interest rate hikes to bring it down, as well as unknown effects of quantitative easing and the consequences of the Ukraine crisis are all feeding into the volatile situation.

“These are very, very serious things which I think are likely to push the US and the world - I mean, Europe is already in recession - and they’re likely to put the US in some kind of recession six to nine months from now,” Dimon said.

According to him, it is nearly impossible to predict whether it would be a severe and long recession or a short and moderate one. Outcomes could range from “very mild to quite hard”, he said, adding, “To guess is hard; be prepared.”

With time already winding down ahead of the November 8 US midterm elections, speculation is rife that the White House is seeking to downplay recession fears in an apparent bid to win voters’ trust and get the better of Republicans. A recent ABC News/Ipsos poll revealed that at least 49% of Americans called the economy or inflation the most important issue that will determine their upcoming vote for Congress.