Yesterday, Fed Chair Jerome Powell, in the midst of imposing yet another 0.75% short-term interest hike, dismissed concerns that we are currently in a recession. Given that this is the same expert who assured us that inflation was transitory, his opinions inspire little confidence. I'm Monday morning quarterbacking, but he should have started raising interest rates last year, when the economy was booming. Now I suspect that interest rates are being increased in a recession. That's going to make things painful.
A classic recession exists when GDP declines for two consecutive quarters. Our GDP declined 1.6% in the first quarter of 2022. We'll find out today if the GDP shows a decline for a second quarter in a row. If it does, we're in a recession. Powell, who is grasping for straws to explain his failure to act last year, has already asserted that the labor market is too strong for there to be a recession. But what he fails to note that there is always a lag between actual unemployment and reports showing a spike. The Biden administration, in advance of today's report, has dispatched the same people who said inflation was transitory to deny we are in a recession.
Here are some other dates to watch:
August 5 - jobs report for July. (Always OK in the summer)
August 10 - July inflation report. (I don't think it can go much higher)
September 16 - next Federal Reserve meeting. (Expect an interest rate hike)
When Trump was confronted with COVID, the only crisis that he did not create himself, the biggest mistake he made was his attempt to deny its existence. Biden has made the same mistake with inflation and the state of our economy.
The first step in solving a problem is admitting you have it.
Updated 11 am: The data is out. The economy shrank in Q2. This is the second quarter in a row that the economy has dipped. This fits the classic definition of recession. The same experts who insisted inflation was transitory are saying everything's fine, nothing to see here, look at the jobs, etc.
Denying a problem exists is no way to make it disappear.
20 comments:
The democrats have changed the definition of recession as they have done in the past to suit themselves.
Aaaaaaannnnnnd ........ we're $31 trillion in debt. This is a rarified air we've not breathed before. Let's pass another spending program and send a $50 billion down payment on Biden's Ukraine War and beg Saudi murderers for oil that we have but won't drill. That should fix things.
What a stunning unforced error. More troubling than the amateurs who caused this in order to push a crazy environmental agenda, is our debt to GDP ratio which is at 124% and rising again. Any 12-stepper will testify that you cannot recover until you first admit you have a problem. The current gang is not only denying they have a problem, they're proposing another round of drinks in the form of another spending binge that Joe Manchin has apparently approved. The reckoning has begun and Democrats are about to make it even more painful for all but the richest. Thank God for a two party system and the relief that's coming in January. I hope it's not too late.
I don’t need to wait on an announcement.
My household is in a recession.
If you don't think inflation can go higher wait when they print another 500billion dollars they are trying now in this bill. Allegedly they have Manchin on board. Inflation will go up and hurt the poorest and middle class the most. But according to you Dems are for the little guy. Also when taxes on corporations go up they pass that cost onto you and I when we purchase which makes things more expensive. But again Bernie says Dems are for the little guy. Enjoy the recession today and I will be anxiously awaiting your blog post on calling out all the dems saying otherwise because they are trying to change the definition.
So, happy days are ALMOST here again! GDP was down ONLY 0.9% for the second decline in a row.
which in White House speak, is ALMOST a windfall towards prosperity. The next sound you hear will be more democrat feet pounding toward registering as republicans. Close the lid on Sleepy Joe's casket, and the democrat party, they're expired. It's the economy, stupid!
Don't worry the democrats and Biden will spin the facts big time.
The democrats and Biden can spin the facts all they want --this country and especially the economy are in very bad shape.
If the news media didn’t sugarcoat everything coming out of this administration, if it didn’t withhold information from the general public, more citizens would realize their country is being taken down HARD. Best of luck to everyone under age 60 in recovering what we once had here.
Guess we are into the classic Democrat fall back plan....HOPE.
it will be difficult to consider it a true recession when 350,000 jobs are being created each month.
To all of you who are now abusing Biden. Each and every administration has done its part in redefining a recession. And contributing to a recession. Slowly ripping apart the middle class and impoverishing the poor further while at the same time buffering and bolstering the pockets of those who need it the least. Biden is just the latest in the long line of S-Bag Politicians. Yes it is falling apart on his watch however the can has been kicked down the curb time and time again. What we need it a good old fashion depression where the wealthiest lose it all and start jumping out windows like they did in the early 1900's. Where in a matter of months many of those who have self defined billions are the ones begging on the streets. The poor will survive because they have very little to fall. And the middle class who have been living within their means and not on credit will also survive. The rest are just plain screwed. Do some digging in history and a full and deep depression will rectify a lot. The most adamant against it are the people who have their hands out and steal from society at all levels.
@10:18 Wow!! Your personal rewrite of history? A desire for a depression? And a hope that the wealthy people kill themselves? You are one sick puppy.
Agreed Biden and the Democrats have pretty much sucked.
Unfortunately, Republicans offer little else that would improve things, and excuse away riots and insurrection.
Horrible choices...
Not only did the second quarter shrink, it was more than expected. Have no fear though, Biden, Yellen and Reese say we are not in a recession. Continue on now..........
How does Biden, who for a year said he doesn't control gas prices, now take credit for a reduction in the price of gas?
@9:40 The great depression flipped the wealth of society for so many. Are you insulted because you are in one of the pseudo rich scenario identified? And yes death is a great equalizer.
@4:27 Good call out. It is standard political mantra though. Deflect when things are going bad until things are going good then take credit for it. You can see it at all levels of politics even on our local levels as well.
@4:27PM gas was 2.65 when Biden took office, it doubled to over 5 bucks and now he's crowing because it's down to 4.39, it's disgraceful! I listened to him yesterday crow about "record deficit reduction" LOL they spent trillions on COVID relief in one time spending bills last year, now this year he claims he lowered the deficit by a record amount. He says he created 9 million jobs, they closed the economy down and then reopened it, now those are "created jobs". We are still below pre-pandemic employment levels. Workforce participation rate is still a percentage point below 2019.
Have no fear though, they just blew another trillion this week, including the "chip act" which is corporate welfare on steroids LOL. More gas on the inflation fire..........
@11:06 You target Biden but remember that all of the house reps and senators are also in the middle of this. They all have to agree to some level for any of this stuff to pass. It is a mass of muck.
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