Politico labels the coming avalanche in bad economic news a Category 5 storm. Given the depressing numbers coming out of Washington, the Biden administration might want to dig a trench and hide while Biden returns to Delaware.
On Tuesday, the consumer confidence numbers, which currently are low, were released. On Wednesday, a Federal Reserve meeting will be held and a decision on interest rates will be made. A press conference by Fed Chair Jerome Powell follows.
On Thursday, the first reading of second quarter economic growth will be released. The monster run of data ends on Friday with the latest numbers about our troubling run of historically high consumer prices inflation. Deutsche Bank analysts wrote to clients today that the “leave your breathless” flood of information would leave them feeling overwhelmed.
The White House believes that hope is eternal. The White House has been praising the drop in the price of a gallon gas this month like they are reading the stomachs of a newt to discover that “prosperity” is right around the corner, as Herbert Hoover stated just before the bottom fell out of the economy.
The direction that things are heading is what matters most now, politically and economically. Is this the tipping point for a severe and devastating recession? Is it possible that the recent drop in gas prices will bring more relief for the strapped consumers who helped make this one of the most hated countries in recent history? This week, we should have a lot more information.
The numbers that will be released on Thursday are more important for the future political landscape. No amount of spin from the Democrats or the administration will change the fact that the GDP is currently in negative growth territory would be able to avoid the conclusion the nation is officially experiencing a recession.
Thursday’s most important number is the first glimpse at the growth of gross domestic product in the second quarter. It is likely to show a decrease in the economy’s size of 1 to 2 percent. This will be following a decline of 1.6% in the economy’s first quarter. This is not a guarantee. This number could surprise you and be flat or marginally higher.
If it goes negative, as most economists anticipate, Republicans will be quick to declare the “Biden Recession”, which is officially underway, as soon as possible. They will likely shout it on cable TV, social media, and campaign ads in every closely contested 2022 contest.
There are many factors that can determine if the country is in recession. For the moment, unemployment is still low and there are plenty of job openings. How long can Biden continue to blame Putin’s price rises and supply chain problems on anyone else than himself? These problems have been ignored for 18 months.
We shouldn’t assume that Biden will take responsibility in any way for inflation.