Will this week be Joe Biden’s economic Armageddon? It appears everyone, at least inside the Beltway, wants to know. Here’s a short rundown of what’s happened already and what’s ahead.
First, news that both Walmart and GM posted less-than-positive earnings reports tanked the markets Tuesday. Walmart projected a full-year profit decline of 11 percent and a decline in earnings per share of 10 percent to 12 percent. Big news.
Meanwhile, GM announced its second-quarter net income came in at $1.7 billion, or $1.14 a share, a decrease from $2.8 billion in the year-earlier quarter. Wall Street was expecting $1.20 a share. Moreover, GM’s CEO said the “company is preparing for a possible slowdown,” which sounds a lot like a recession on the horizon.
But the bigger news Tuesday was the Conference Board’s Consumer Confidence Index, as it reported the third consecutive month of decline in consumer confidence. The board’s senior director of economic indicators predicted, “As the Fed raises interest rates to rein in inflation, purchasing intentions for cars, homes, and major appliances all pulled back further in July. Looking ahead, inflation and additional rate hikes are likely to continue posing strong headwinds for consumer spending and economic growth over the next six months.”
Not exactly good news for the president and his party. But there’s more to come. On Wednesday, the Federal Reserve is expected to increase the nation’s benchmark interest rate. On Friday, the Bureau of Economic Analysis releases its Personal Consumption Expenditures Price Index, which reflects changes in the prices of goods and services bought by U.S. consumers.
But Thursday is the day Washington is waiting for as the mother of all GDP reports drops, with many expecting that the second-quarter GDP will be underwater, signaling the country is in recession. Not that the Biden administration and its supporters haven’t spent the past few days trying to redefine what constitutes a recession to cushion the blow of more bad economic news.
Over the past couple of weeks, in a vain attempt to reframe the definition of a recession, Team Biden has added yet another new word, “technically,” to their expanding in-house economic dictionary. We’ve seen this movie before with earlier efforts to downplay rising inflation numbers through words like “transitory” and “the country is in a period of transition.” It didn’t work.
With gloomy expectations at every turn, everyone from Treasury Secretary Janet L. Yellen to White House economic adviser Brian Deese to the president himself has joined the rhetorical fray, trying to sell the idea that even if Thursday’s report shows negative growth, that doesn’t “technically” constitute a recession.
Last Thursday, the White House Council of Economic Advisers put it this way on its blog, “What is a recession? While some maintain that two consecutive quarters of falling real GDP constitute a recession, that is neither the official definition nor the way economists evaluate the state of the business cycle.” Since when?
When asked Monday about the potential for a recession, the president offered, “My hope is we go from this rapid growth to a steady growth. And so, we’ll see some coming down. But I don’t think we’re going to — God willing — I don’t think we’re going to see a recession.”
As someone once said, “Hope is not a strategy.”
Perhaps Biden ought to look beyond his economic circle and listen to a wider group of economists instead of making self-serving statements with little basis in reality. He could start with Michael Strain, director of economic policy studies at the American Enterprise Institute, who tweeted recently, “Out of the past 10 times the U.S. economy has experienced two consecutive quarters of negative economic growth, how many times was a recession officially declared? Answer: 10.”
Economic data matters, as do the voices spinning the economy on both sides. But I would argue there are other voices at this moment that are more important — the people and what they believe and feel. If the newest Winning the Issues Survey (July 23-24), out this week, got it right, the majority of voters are far ahead of Washington in assessing the sorry state of the U.S. economy and its impact on their own personal economies.
In the interest of brevity, I’m going to tick off the major findings, which send a clear message on the electorate’s view of the economy and their perception of how Biden and congressional Democrats are handling it.
- 61 percent of voters believe the country is already in recession; only 25 percent don’t.
- 67 percent don’t believe gas prices are going down significantly; 23 percent believe they are.
- 54 percent disapprove of the job Biden is doing overall as president; 36 percent approve. (Independents are at 60 percent disapprove, 25 percent approve.)
- 68 percent say the country is on the wrong track; 21 percent believe it’s going in the right direction.
- 57 percent disapprove of Biden’s handling of the economy, 33 percent approve. (Independents are at 62 percent disapprove, 21 percent approve.)
- 61 percent disapprove of Biden’s handling of inflation; 30 percent approve. (Independents are at 66 percent disapprove, 19 percent approve.)
- 66 percent say the economy is on the wrong track; 21 percent believe it is headed in the right direction. (Independents are at 74 percent wrong track, 11 percent right direction.)
- 51 percent say Biden’s economic policies are incorrect; 29 percent say they are correct.
- 52 percent believe government policies under Biden and Democrats in Congress have caused inflation to increase and prices to go up; 36 percent do not believe that.
- Voters say they have more confidence in Republicans to handle inflation, by 48 percent Republicans to 34 percent Democrats.
At this point, I think it’s fair to ask what matters more to most people — government data and partisan sparring over its meaning, or the price of a gallon of milk at Walmart.
People don’t focus on economic reports; most have an increasingly cynical view of their government already. Trying to play rhetorical games with the state of the American economy rings hollow for voters, many of whom see it as the act of a desperate administration. And desperation in a president is never a good look.
Simply put, weasel words don’t work. Neither does bad economic policy, no matter how many complicit economists you dig up. The problem the White House and Democrats on the Hill now face in their effort to redefine what makes a recession is that voters believe we’re already there.
David Winston is the president of The Winston Group and a longtime adviser to congressional Republicans. He previously served as the director of planning for Speaker Newt Gingrich. He advises Fortune 100 companies, foundations, and nonprofit organizations on strategic planning and public policy issues, as well as serving as an election analyst for CBS News.