White House battles recession fears as dismal economic news looms

Brendan Smialowski
·5 min read

WASHINGTON — White House officials have been increasingly trying to combat the narrative that the United States is on the brink of a recession as they look to get out ahead of grim economic data expected Thursday.

White House officials have been blanketing the airwaves over the past week, briefing reporters, putting out blog posts and urging surrogates to amplify their message as they seek to highlight areas of strength in the economy amid growing Republican attacks.

“We’re not going to be in a recession," Biden told reporters Monday.

The White House acknowledged Wednesday that inflation is putting pressure on consumers, but they pointed to strong job growth as a hopeful sign for the economy. A senior administration official said one of their concerns is that fears of a recession will cause consumers to pull back, creating a "negative self-fulfilling prophecy," which has prompted the White House to try to push back on recession concerns ahead of data on economic growth set to come out Thursday.

"I wouldn't say it's my greatest worry, but I think it explains why we feel it's important to be going out these few days before the GDP report and make sure people understand, accurately, that even if you had a negative number tomorrow that we are not and have not been in a recession," said the official.

Economic analysts expect data to be released Thursday showing an overall decline in gross domestic product for the second quarter in a row, one of a number of metrics that in the past have been used to signal the U.S. economy was entering a recession. Earlier this week, data showed consumer confidence declined last month to the lowest level in more than a year.

The Federal Reserve on Wednesday announced it was raising its key interest rate by 0.75% to combat rising inflation, but Fed Chairman Jerome Powell said he didn’t think the U.S. was currently in a recession.

“I do not think the U.S. is currently in a recession and the reason is there are too many areas of the economy that are performing too well,” he said.

For months, White House officials have been fretting over the impact the economy could have on Democrats' chances of holding on to control of Congress and trying to land on a message that will break through with voters, said a person close to the White House who asked not to be named talking about internal White House business.

The latest pushback around a recession is indicative of those wider concerns and efforts, the person said.

Indications that the U.S. could be tipping toward a recession continue to weigh heavily over Democrats with just over three months to the midterm elections. Biden has said he and other top administration officials will increase their travel ahead of the midterms to make the case that their plan for improving the economy is better than the alternative should Republicans take control of Congress next year.

"We have to remind people what life will be like for American families, in particular, if Republicans get any of this power back, and that comes into play by drawing a contrast and making it clear where Democrats stand on the economy versus where Republicans stand," Democratic communications strategist Adrienne Elrod said.

As part of the White House push this week, officials have sought to emphasize areas of the economy they believed remain strong. Rather, the White House says the U.S. is transitioning to a slower growing economy, pointing to low unemployment, consumer spending that “remains solid,” credit and mortgage delinquencies at low levels and household balance sheets that “remain largely in good shape,” Brian Deese, Biden's chief economic adviser, said.

“The totality of the economic data is consistent with that type of transition, and it’s not consistent with a recession,” he said during a briefing with reporters Tuesday.

Biden continued pushing his economic message even as he isolated with Covid this week, holding virtual events touting the work his administration was doing to lower gas prices and the importance of Congress passing legislation to bolster U.S. computer chip manufacturing.

“The employment rate is still one of the lowest we’ve had in history, it’s in the 3.6 area, we still find ourselves with people investing, my hope is we go from this rapid growth to a steady growth," he said. "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.”

Treasury Secretary Janet Yellen made a similar case Sunday on NBC's "Meet the Press," saying “we are not in a recession now” and that even if GDP growth declines, “we should be not characterizing that as a recession.”

The technical classification of a recession is made by the National Bureau of Economic Research, a private nonpartisan research group that looks at a range of data and typically makes a designation well after a recession has begun. But a second quarter in slowing GDP growth will likely give fodder to Republicans to try to argue the U.S. is already in a recession.

Whether the country is technically in a recession or not may be irrelevant to voters, the majority of whom have said in multiple surveys that they believe the country is already in a recession.

It's a feeling shared by corporate CEOs — 15 percent of whom said they believed that their region was already in a recession and 60 percent said they expect one in their main region by the end of next year, according to a survey of more than 750 CEOs globally surveyed in May by the Conference Board.

It's a reality the White House acknowledged and said it is continuing to try to address.

“But from the president’s perspective, and putting that technical question aside, the most important question economically is whether working people and middle-class families have more breathing room," Deese said. "They have more job opportunities, their wages are going up in a stable way, and they’re able to afford the important things in their lives."