President Joe Biden and Democrats have been busy countering the political repercussions of an economic growth report that many saw indicating a recession, focusing instead on falling gas prices amid improving inflation and strong jobs numbers.
But with the Commerce Department poised to publish its third-quarter gross domestic product data days before November’s midterm elections, the White House and the party may run out of time to spin any bad news.
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With less than three months before the midterm cycle, Democrats are grappling with the prospect of voters remaining sour on the economy, even if there is no recession and unemployment stays low, according to Brookings Institution Governance Studies Vice President Darrell West. That is predominantly because of persistent inflation, from higher gas prices to housing costs, West told the Washington Examiner.
“Many can be feeling OK while others struggle,” West said. “That poses problems for the party controlling government because people hold them responsible for how things are going.”
Biden’s average economic approval-disapproval rating is 36%-61% amid his overall approval-disapproval of 41%-56% and 23%-70% right track-wrong direction polling, according to RealClearPolitics. That is in addition to two separate surveys released this week that demonstrate the White House has not completely undermined economists who consider two consecutive quarters of negative growth to mark the start of a recession. An NBC study found 68% of the public perceives the U.S. to be in a recession, while the National Association of Business Economics found 73% of economists predict the country will be in a recession next year — 19% are convinced it is already in one.
The Republican National Committee reminded reporters in a memo Monday that year-on-year inflation is not 0%, despite July’s promising month-on-month 0.3% figure, and gas prices continue to average $1.50 more per gallon than before Biden was president.
“Midterm implications: Biden and Democrats are increasingly out of touch with the concerns of voters,” RNC spokesman Nathan Brand wrote. “While some Democrats seek distance from Biden’s low approvals, voters ultimately hold them responsible for marching along with Biden’s agenda.”
A White House official cited the labor market as one reason why the U.S. is “in a better position to fight the global economic challenges.” The economy added 528,000 nonfarm payroll jobs last month, and the unemployment rate was 3.5%, the lowest since February 2020.
“This job creation is no accident — it’s the result of the president’s economic plan, including the American Rescue Plan and Bipartisan Infrastructure Law,” she said.
The official also repeated that gas prices have decreased for 10 weeks in a row and that Biden signed the Inflation Reduction Act, his highly anticipated $430 billion climate and healthcare bill, last week, though the Congressional Budget Office found it may not reduce everyday costs.
American Enterprise Institute senior fellow Desmond Lachman agreed with the White House that the National Bureau of Economic Research officially declares a recession, endorsing the organization’s “holistic” assessment of the economy that covers “the labor market, consumer and business spending, industrial production, and incomes.”
But Lachman, a former Salomon Smith Barney managing director and International Monetary Fund policy development deputy director, is still bracing for a recession late this year or early next year. He based his forecast on the housing market and the likelihood the equity market will “tank” if the Federal Reserve Bank keeps raising interest rates by 75 basis points, as well as consumer sentiment more broadly.
“I’m expecting a lot of trouble from abroad,” Lachman said. “If Russia turns off the gas to Germany, that’s going to be a really bad thing, and what’s going on in China is really, really troubling. So, there’s a very poor international environment, which is going to be another drag on the U.S. economy.”
The White House was criticized last month for its response to the Commerce Department Bureau of Economic Analysis’s “advance” second-quarter real GDP estimate. The bureau found GDP declined at an annual rate of 0.9% between April and June after the economy shrunk by 1.6% during the first quarter. The scrutiny intensified after the White House circulated a Council of Economic Advisers blog post through an email with the subject line, “What is a Recession?”
The National Republican Senatorial Committee, Senate Republicans’ campaign arm, mocked the White House for being in the “bargaining stage” of “economic grief” by modifying the definition of a recession rather than “finding a solution.” Mike Berg, a spokesman for House counterpart, the National Republican Campaign Committee, added: “You can draw a straight line from the inflation crisis caused by Democrats’ American Rescue Plan to this recession.”
While avoiding a recession would help Democrats in November, Biden’s reelection — or the prospects of any other Democratic nominee — could hinge on one not occurring afterward.
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The Bureau of Economic Analysis’s advance third-quarter GDP estimate is due on Oct. 27.
