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Projected Economic Recession in the US; Biden Administration Remains Optimistic

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Projected Economic Recession in the US; Biden Administration Remains Optimistic

US – The US Economy has been battered by the ongoing interest rate hike being implemented fiercely by the US Federal Reserve. With the year’s second-quarter ending in a few days, a possible recession is looming, at least technically speaking.

According to the US National Bureau of Economic Research (NBER), the official arbiter agency that tracks economic downturns, a “Recession” by technicality is defined by at least two consecutive quarters of negative economic growth. In addition, it is characterized by the following: low or negative Gross Domestic Product (GDP) growth, falling income and slowing retail sales, and lastly, high unemployment.

Currently, recent estimates suggest that the US economy is extremely likely to produce a decline in GDP growth this second quarter. The GDP already declined by 1.5% in the first quarter of the year, a significant decline that is worse than the result during the COVID-19 pandemic period in 2020. Therefore, if GDP declined this second quarter, it would technically meet the criteria for a recession.

The Biden Administration Says Otherwise

In spite of this, the US Government under the Biden Administration has echoed a singular message that a recession is “not inevitable.”

Last week, in a statement made by the US President, Joe Biden, answering the question regarding the looming recession, he said: “First of all, it’s not inevitable. Secondly, we’re in a stronger position than any nation in the world to overcome this inflation.” Biden added that the public must “be confident.” He continued, “I am confident. We’re better positioned than any country in the world towards the second quarter of the 21st century.”

Following Biden’s statement on Sunday, both the Secretary of US Treasury, Janet Yellen, and the Director of the Administration’s National Economic Council (NEC), Brian Deese, have recently backed up and elaborated on the administration’s position on the matter.

In an ABC’s interview, Yellen exclaimed, “I expect the economy to slow. It’s been growing at a very rapid rate as the economy, and the labor market is recovered, and we reached full employment. So, it’s natural now that we expect to transition to steady and stable growth. I don’t think a recession is at all inevitable.” She added, “Clearly, inflation is unacceptably high. It’s President Biden’s top priority to bring it down, and Chair Powell has said that his goal is to bring inflation down while maintaining a strong labor market. That’s going to take skill and luck, but I believe it’s possible. I don’t think a recession is inevitable.”

On the other hand, Deese supported Yellen’s view in a statement on Fox News, saying, “Not only is the recession not inevitable, but I think that a lot of people are underestimating those strengths and the resilience of the American economy.” He continued, “We have been through Delta and Omicron. We’ve had a war in Europe and all of the impacts that have had through it. [Yet], the American economy has remained resilient. What we want to focus on now is taking every step we can to continue that progress.”

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