Biden Claims ‘Very Slight’ Recession Is Worst-Case Scenario

October 13, 2022 Topic: Recession Region: United States Blog Brand: Politics Tags: U.S. EconomyRecessionJoe BidenInflationFederal Reserve

Biden Claims ‘Very Slight’ Recession Is Worst-Case Scenario

Biden told CNN on Tuesday that the United States could be tipped into a “slight recession” but that he doesn’t anticipate that happening.

President Joe Biden told CNN on Tuesday that the United States could be tipped into a “slight recession” but that he doesn’t anticipate that happening.

“Every six months they say this. Every six months, they look down the next six months and say what’s going to happen,” said Biden, referring to recent economic projections by major U.S. banks.

“It hadn’t happened yet. It hadn’t ... I don’t think there will be a recession. If it is, it’ll be a very slight recession. That is, we’ll move down slightly,” he continued, adding that “it is possible. Look, it’s possible. I don’t anticipate it.”

Earlier this week, Bank of America contended that the Federal Reserve’s fight to tame forty-year-high inflation levels by continuing to aggressively raise interest rates will cause the U.S. economy to start losing tens of thousands of jobs a month beginning early 2023.

Last month, the central bank approved a third consecutive seventy-five-basis-point interest rate hike and suggested that it will keep raising rates well above the current level. With the move, the central bank took its federal funds rate up to a range of 3 percent to 3.25 percent, the highest level since the global financial crisis in 2008. Rates are projected to reach 4.6 percent next year, according to a median estimate from the Fed.

On Monday, JPMorgan Chase CEO Jamie Dimon warned that the United States and the global economy could be mired in a recession by the middle of next year, according to a CNBC report. He said the U.S. economy is “actually still doing well,” but “you can’t talk about the economy without talking about stuff in the future—and this is serious stuff.”

Among the indicators he sees highly concerning are the inflationary pressures, interest rates likely rising, the unknown effects of quantitative tightening, and the conflict in Ukraine. “These are very, very serious things which I think are likely to push the U.S. and the world—I mean, Europe is already in recession—and they’re likely to put the U.S. in some kind of recession six to nine months from now,” Dimon said.

Meanwhile, Treasury Secretary Janet Yellen on Tuesday struck a more optimistic tone despite the ongoing headwinds.

“From the perspective of the United States, I think the United States is doing very well,” she told CNBC, pointing to strength in the labor market.

“That shows we have a very resilient economy. An economy of course that's slowing, which is something we expected fully after a strong recovery [from the pandemic],” she continued.

However, Yellen acknowledged that inflation is still too high and reversing that trend is a priority for the Biden administration.

Ethen Kim Lieser is a Washington state-based Finance and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn

Image: Reuters.