As Americans struggle to put groceries on the table and fill the gas tank to get to work, they are wondering where we are and how long this is going to last.
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Some, comparing historically, would say that we are in a recession.
What determines a recession?
Forbes defines a recession as being ” a sustained period of weak or negative growth in real GDP that is accompanied by a significant rise in the unemployment rate.”
Unemployment certainly is down, as “help needed” signs are seen across the country daily.
The National Bureau of Economic Research defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months.”
This state of being certainly has lasted more than a few months, but added to the pandemic shutdowns, business closings, and workforce turnover it could be argued we have been in this state for a few years.
The Biden administration has a ready answer for each problem, with fingers pointed at the blame.
But how long can Biden blame “supply chain problems” and “Putin’s price increases” on anyone but himself?
He’s had 18 months to address these problems and has failed to do so.
The tiny relief at the gas pump recently that still has gas prices toward the roof is little, albeit some, help.
And there is no sign of an upswing, in fact numbers are showing the opposite.
Politico calls the coming avalanche of bad economic news a “Category 5 storm.”
Indeed, the Biden administration may want to dig a hole and hide while Biden goes to his summer home in Delaware, given the depressing numbers that will come out of Washington this coming week.
Consumer confidence numbers (which currently stink) hit on Tuesday. A Federal Reserve meeting and decision on interest rates, coupled with a press conference from Fed Chair Jerome Powell, follows up on Wednesday.
The first reading on second quarter economic growth drops on Thursday. And the latest numbers on our vexing run of historically high consumer price inflation close out the monster run of data on Friday. In a note to clients today, analysts at Deutsche Bank suggested the flood of information will “leave you breathless.”
This is not good news.
But for the White House, hope springs eternal. The Biden administration has repeatedly said that the gas prices will drop, and that the economy is on a n upswing.
PJ Media stated its “as if they’re reading the entrails of a newt and discovering that ‘prosperity is just around the corner,’ as Herbert Hoover claimed right before the bottom dropped out of the economy.”
Politico looks in the forward direction:
What matters now, both politically and economically, is the direction things are headed. Are we tipping toward a significant and painful recession? Or does the recent decline in gas prices portend more relief to come for strapped consumers who have helped turn this into one of the most hated economies in recent history? We should know a lot more about the answers by this time next week.
This coming Thursday’s numbers are the direction to look for the future of the country and the Democratic White House.
PJ Media notes, “If the GDP is in negative growth territory, no amount of spin by the administration or Democrats will avoid the conclusion that the nation is officially in a recession.”
In that case, we will be solidly in a certain recession, regardless of the pandemic issues.
Those who are following will want to look at numbers on Thursday for this year’s second quarter.
The most politically radioactive number comes Thursday with the first look at gross domestic product growth in the second quarter of the year. It will likely show a decline in the size of the economy of around 1 to 2 percent. That will follow a first quarter decline of 1.6 percent. This isn’t a lock. The number could surprise us and come in flat or even marginally higher.
Most economists are expecting that the numbers will progress in a negative direction.
Bloomberg reports that “the U.S. economy will likely fall into a mild recession by the end of 2022 and the financial conditions will tighten further, consumer sentiment is souring, energy and food supply distortions have worsened and the global growth outlook has deteriorated.”
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This past spring prices were 8.3% higher, when annual inflation is about 6.2%, and The Economist states that ” A recession in America by 2424 looks likely.”
This direction is not the path to be on.
If the numbers plummet as predicted, Republicans and anyone paying attention will declare that the “Biden Recession” is now officially underway.
And drastic changes need to be made in leadership in order to stay off financial disaster and reverse the economic downward spiral to an upward, healthy growth for the United States, its businesses and its citizens.