President Joe Biden said in a Thursday interview with the Associated Press that a recession is “not inevitable,” instead encouraging Americans to wait and see whether repeated warnings from economists are correct.
The interview came amid a week of poor economic news. The Consumer Price Index (CPI) increased 8.6% year-over-year as of May and the Producer Price Index (PPI) increased 10.8% over the same period in a continuation of record-high inflation. The stock market also entered bear territory and the Federal Reserve hiked interest rates by the highest increment since 1994. Meanwhile, the yield curve inverted, constituting one of Wall Street’s key recession indicators.
“You’ve got serious economists who warn of a recession next year… What should Americans believe?” AP White House reporter Josh Boak asked Biden.
“They shouldn’t believe a warning. They should just say: ‘Let’s see. Let’s see, which is correct.’ And from my perspective, you talked about a recession. First of all, it’s not inevitable,” Biden replied before claiming that he reduced the budget deficit and referred to a survey taken last year to allege that Americans have more robust savings.
Though unemployment is at near pre-recession lows and wages are nominally rising, real average hourly wages have dropped 3% year-over-year as of May — meaning Americans are tightening their budgets or working more than last year to enjoy the same standard of living.
Boak noted the same reality. “They are less dependent on unemployment benefits and the government for aid, and yet more of them say they’re having trouble with meeting their weekly expenses… What’s that paradox?” he pressed. In response, Biden pivoted to the Trump administration’s “failure… to act on COVID” and Americans’ poor mental health.
Biden repeated his argument that inflation is higher “in every other major industrial country in the world” — which Fox News correspondent Peter Doocy pressed White House Press Secretary Karine Jean-Pierre about on Thursday. The 8.3% inflation rate seen in the United States from April 2021 to April 2022 was higher than the 7.8% rate in the United Kingdom, the 7.4% rate in Germany, the 6.8% rate in Canada, and the 2.5% rate in Japan, according to the most recent available data from the Organization for Economic Cooperation and Development (OECD).
Earlier in the AP interview, Boak pointed to the University of Michigan’s benchmark Survey of Consumers, which has shown consistent declines in consumer sentiment since April 2021. Yet Biden appeared to argue that respondents to the survey “had a very different view” until the Russian invasion of Ukraine.
Biden also said there was “zero evidence” that the $1.9 trillion American Rescue Plan caused inflation, then disagreed with Treasury Secretary Janet Yellen’s earlier assertion that the package could end up causing a marginal contribution to inflation.
“Now you just said two different things. You said Republicans said I caused inflation. She said it may have a marginal impact on it,” Biden told Boak. “You could argue whether it had a marginal, minor impact on inflation. I don’t think it did. And most economists do not think it did. But the idea that it caused inflation is bizarre.”
Last year, an analysis from the University of Pennsylvania’s Wharton School showed that the American Rescue Plan was less effective than President Donald Trump’s $2.3 trillion CARES Act, because the latter passed when the economy was at the worst point of the recession and therefore provided a more immediate boost to economic output.