On Thursday, the U.S. Bureau of Economic Analysis’ (BEA) first estimate of the nation’s gross domestic product was worse than the predicted expansion of 0.5%, FXStreet noted. The economy shrank by a 0.9 annualized rate. Economists widely define a recession as two consecutive quarters of negative growth. Despite that, Biden claimed in a statement that the contraction was unsurprising and the economy is heading in the right direction.
“Coming off of last year’s historic economic growth – and regaining all the private sector jobs lost during the pandemic crisis – it’s no surprise that the economy is slowing down as the Federal Reserve acts to bring down inflation,” Biden remarked.
“But even as we face historic global challenges, we are on the right path and we will come through this transition stronger and more secure,” the president added. “Our job market remains historically strong, with unemployment at 3.6% and more than 1 million jobs created in the second quarter alone. Consumer spending is continuing to grow. Earlier this week, I met with the Chairman of SK Group from Korea, just one of the companies investing more than $200 billion in American manufacturing since I took office, powering a historic recovery in American manufacturing.”
Biden also claimed that the key to stopping inflation would be more government spending and raising taxes under two separate plans.
“My economic plan is focused on bringing inflation down, without giving up all the economic gains we have made,” he added. Congress has an historic chance to do that by passing the CHIPS and Science Act and Inflation Reduction Act without delay.”
The two plans combined would cost taxpayers roughly $920 billion. CHIPS would cost nearly $250 billion and the Inflation Reduction Act would spend $670 billion total while raising certain taxes. Experts have surmised that Biden’s $1.9 trillion “American Rescue” spending plan contributed to the current record-high inflation mentioned by the president.
Regarding the most recent economic data, the BEA explained on Thursday, “The decrease in real GDP reflected decreases in private inventory investment, residential fixed investment, federal government spending, state and local government spending, and nonresidential fixed investment that were partly offset by increases in exports and personal consumption expenditures (PCE).”
“Imports, which are a subtraction in the calculation of GDP, increased,” the BEA noted.
The CHIPS and Science Act passed the Senate on Wednesday, and the House is expected to vote upon it this week.