Yahoo Finance columnist Rick Newman weighs in on President Biden's latest comments in which he stated the U.S. is not in a recession despite two straight quarters of negative GDP growth.
JOE BIDEN: Both Chairman Powell and many of the significant banking personnel and economists say we're not in a recession. We've created nine million new jobs so far, just since I've become president. Businesses are investing in America at record rates, at record rates. Foreign business, like SK and others, are investing in America, hundreds of millions and trillions of dollars sum total. That doesn't sound like a recession to me.
- That's President Biden assuring the nation that despite recent economic stresses, the country is not in the midst of a recession. Yahoo Finance senior columnist Rick Newman here with that story. And Rick, you say GDP decline now back-to-back quarters-- technical definition of a recession-- should not matter to the Biden administration. Uh, what? [LAUGHTER]
RICK NEWMAN: I don't think that-- well, first of all, many Americans already think we're in a recession. And they thought that before the GDP number. And they don't think that because of GDP. I don't think normal people pay much attention to GDP.
But there was a poll by Morning Consult two weeks ago that found that 65% of people say they think we're in a recession already. And it's not because they understand how important it is if the entire economy shrinks by 0.9% from one quarter to the next. That doesn't matter to anybody.
But because gasoline is up 50% during the last 12 months, and groceries are more expensive by 12%, and rent is going up, and things are going up, and that people are falling behind in terms of how much their incomes are going up relative to inflation, that is totally the thing that matters to President Biden and to most voters. And I think this GDP report, it wasn't a great report, but I think it's just going to wash right by, and we're going to go back to everybody's worried about inflation.
- Rick, how much of the strong jobs market do you think could potentially help Biden here? Because he's searching for anything. He's trying to convince Americans that we're not in a recession. At least he has that piece to hold onto.
RICK NEWMAN: Yeah. So Biden's-- I mean, he's right when he says the job market is as strong as it is. And we just had Alan Blinder. You guys were talking with the great economist Alan Blinder. I mean, like, we don't have recessions where we add jobs. I mean, that doesn't-- that's not a thing that happens. And if that's a recession, then we should enjoy it, because that's a good thing to have.
But employers have added 2.7 million new jobs just this year. That's during those two quarters when the economy was shrinking. So I mean, everybody needs to try to get their brain around that. The economy is shrinking, and we're still adding almost three million new jobs in six months this year.
So this will help. I think this will help Biden when inflation gets better. We have seen gas prices come down, I think, almost $0.70 a gallon. They're now below $4.30. I've been saying for a long time what will help Biden immensely is when voters start seeing gas prices that start with a 3, not with a 4.
But when-- if that does happen, then I think consumers will start to believe maybe things are OK if we can start feeling we can afford groceries more easily, we can afford to drive more easily, and job security. Those are the two things voters care about. It's inflation and job security.
- Yeah. He's going to need at least two positive inflation prints, a lot like the Fed.
RICK NEWMAN: Probably.
- To have any luck in the midterms.
RICK NEWMAN: But it's already helping that gas prices are coming down.
- No question.
- Yeah. Yeah. $4.28 today. We'll see whether or not we get below that $4.00 mark.
RICK NEWMAN: We're watching every penny every day, aren't we?
- We are. Rick Newman, thanks so much for coming on set with us.
RICK NEWMAN: Bye, guys.
- All right.