President Joe Biden is claiming economic success in spite of the second straight quarter of contraction in economic growth in the United States. The first estimate of the nation’s gross domestic product by the U.S. Bureau of Economic Analysis (BEA) was worse than the expected 0.5% expansion, FXStreet noted. The U.S. economy contracted at an annualized rate of 0.9. Economists typically define a recession as two consecutive quarters of negative growth. Despite this, President Biden claimed in a statement that the contraction was not surprising and that the economy was headed 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 declared in a statement.
“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,” President Joe Biden 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.”
President Biden also said the answer to how to stop inflation would be more government spending and higher taxes in 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.”
Together, the two plans would cost taxpayers an estimated $920 billion. CHIPS would cost an estimated $250 billion and the Inflation Reduction Act would spend a total of $670 billion while raising some taxes. Experts have speculated that Biden’s $1.9 trillion “American Rescue” spending plan has been a factor in the current record inflation cited by the president.
As for the most recent economic data, the BEA explained “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 stated. Joe Biden planned to give a speech on the economy later. The president spoke after federal officials said the gross domestic product shrank by 0.9% in the second quarter. It earlier went down by 0.4% in the first quarter. Those reductions fit the layman’s definition of a recession, although the White House counters that the rock-bottom unemployment rates belie that claim. The CHIPS and Science Act was passed by the Senate and the House is scheduled to have a vote this week.
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