UPDATED 12:53 PM PT – Monday, June 20 2022
The messaging seems to be clear among economists within the Biden administration: don’t say recession. They appear to be reluctant to say a recession is looming, despite warning the economy is likely to slow down.
Several of Biden’s economists were scattered around on several corporate news outlets, where they asserted inflation will likely “not come down to the Federal Reserve’s 2 percent target” and the US economy will “slow down” yet a recession is “not inevitable.”
Together, we’ve made extraordinary progress in laying a new foundation for our economy.
But there’s still so much at stake. pic.twitter.com/0hcrgpdTGs
— President Biden (@POTUS) June 20, 2022
President of the Cleveland Fed, Loretta Mester said she agreed with Fed Chairman Jerome Powell that the Central Bank cannot do much more than it already has done. Powell announced last week that the Fed is going to hike the interest rate by 75 basis points, which is 50 percent more than they originally planned.
Mester asserted, this will aim to moderate demand for goods and services, so that it can get back in balance with the supply side of the economy. However, she went on to blame external factors for high prices of gas, while pointing to the Russian invasion of Ukraine.
“Of course there are other things going on as well,” said Mester. The Ukraine situation which is a tragedy has really led to the prices. Other things were moving on the supply side as well. No doubt, supply conditions remain constrained longer than I think anyone thought.”
Meanwhile, Secretary of Treasury Janet Yellen echoed the administration’s talking point that the economy under Biden was booming until it suddenly went bust. Yellen claimed the labor market is the strongest in decades, despite record number of people quitting their jobs. She also blamed Russia for America’s high energy and food prices. She stressed, the only way to manage the economic crises is to submit to Biden’s climate agenda.
“I think that producers were partly caught unaware by the strength of the recovery in the economy and weren’t ready to meet the needs of the economy,” Yellen expressed. “High prices should induce them to increase supplies over time and look at some medium term matter. The way in which we can assure reasonable energy expenses for household is to move to renewables, to address climate change. That’s the way to free us from GO political movements and gas prices.”
Additionally, Director of the National Economic Council Brian Deese downplayed the negative impacts of Biden’s economic policies. He noted the long discredited practice of calling the sky high inflation rates as “transitory” and also tried to say there are immensely positive things Biden has done.
“We need to navigate through this transition in a way that gets us to stable growth without giving up on all the economic gains that we’ve made,” expressed Deese.
However, former the US Treasury Secretary under President Bill Clinton, Larry Summers, said a recession is in fact on the horizon. Many experts have credited Summers as one of the most prophetic critics who accurately predicted the economic crises coming into fruition. He asserted that record inflation, food and energy prices are all signs that point to a recession. The former top economist said there are several things the government can do to pullout of the economic crisis.
“If at long last we can have some kind of bipartisan budget bill with three elements,” stated Summers. “Reduction of pharmaceutical prices put in place, the partial repeal of the Trump tax cuts and more energy supply approach.”
In the meantime, the Fed is gearing up to unleash another massive interest rate hike if the inflation rate that will continue to soar. Critics of the Biden administration have urged officials to stop playing the blame game and work towards fixing their mistakes.
Several polls have shown American voters are looking to make a change in the midterm elections. They want to see better economic policies in America