Politico calls the coming avalanche of bad economic news a Category5 storm. Biden might be trying to hide from the depressing numbers coming from Washington by going to Delaware.
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, follow up on Wednesday.
On Thursday the first reading of the second quarter economic growth data will be available. Nevertheless, 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.”
The White House believes hope is eternal. The administration has been touting the dropping price of a gallon of gas this month 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.
What is the truth behind these newt entrails?
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.
Thursday’s numbers are more important than ever for the future political landscape. If the GDP falls below zero growth, then the country is in recession.
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.
If it turns negative, as most economists predict, Republicans will quickly declare the “Biden Recession”, as it is officially underway, on cable TV and social media.
Indeed, there are other factors that determine whether the nation is in a recession. Unemployment remains historically low — for the time being — and job openings remain plentiful. 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.
It is fair to assume that Biden will accept any responsibility for inflation.