Biden admin. dismisses recession concerns ahead of looming GDP report

FILE - Pedestrians pass the New York Stock Exchange on July 14, 2022, in New York. The U.S. economy is caught in an awkward, painful place. A confusing one, too. Growth appears to be sputtering, home sales are tumbling and economists warn of a potential recession ahead. But consumers keep spending, businesses keep posting profits and the economy keeps adding hundreds of thousands of jobs a month. (AP Photo/John Minchillo, File)

FILE – Pedestrians pass the New York Stock Exchange on July 14, 2022, in New York. The U.S. economy is caught in an awkward, painful place. A confusing one, too. Growth appears to be sputtering, home sales are tumbling and economists warn of a potential recession ahead. But consumers keep spending, businesses keep posting profits and the economy keeps adding hundreds of thousands of jobs a month. (AP Photo/John Minchillo, File)

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UPDATED 12:01 PM PT – Tuesday, July 26, 2022

The White House has continued to play off concerns of recession. Both the President and his aides insisted Monday that their administration does not believe the economy will hit a recession despite widespread inflation. Their dismissal came ahead of the GDP report to be released this week, which will show whether the US has experienced two consecutive quarters of shrinking.

White House economic advisers have since tried to ignore the definition of recession, saying even if the advance GDP report comes back negative it’s “unlikely” the US is in recession. Meanwhile, Cambridge economist Mohamed El-Erian criticizes the Federal Reserve specifically for doing “too little, too late” to stop inflation.

In an op-ed for The Hill Tuesday, El-Erian noted the Fed insisted that inflation was not a problem for 15-months until it became obvious inflation has spiraled out of control. The economist said the current inflation rate of 9.1 percent is damaging to economic growth.

As a result. El-Erian said the Fed will now have to raise interest rates aggressively, which will contribute to an impending economic downturn. On top of that, many economists agree the US is sliding into a recession. El-Erian concluded by asserting a recession could have been avoided, but the Fed’s actions will likely cause an economic downturn.

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