He The United States government denied on Thursday the possibility of a recession, thus dismissing the forecasts of the Federal Reserve (Fed) whose minutes of the monetary meeting that it developed last month revealed that its economists they assume a moderate contraction for this year.
White House Press Secretary, Karine Jean-Pierreaffirmed that the employment and consumption numbers are solid and that there is no risk of a recession.
“We are seeing the events of the president’s plans (Joseph Biden), and the latest economic indicators are not consistent with the possibility of a recession or even a ‘pre-recession’“, he pointed Jean Pierre this morning, according to the Bloomberg agency.
On Wednesday, the Fed published the minutes corresponding to the last monetary meeting of the entity in which a new interest rate hike of 25 percentage points.
They indicated that “the projection of the Fed ‘staff’ at the time of the March meeting include a mild recession beginning this yearwith a recovery in the following two years”.
The White House official noted that job growththe low unemployment rate and the consumer spending indicate the opposite.
“These are the indicators that show us that we are not headed for a recession or a ‘pre-recession,'” he said.
He also stressed that the inflation is fallingalthough he pointed out that remains above ideal goalswhich could motivate the Fed to make more rate hikesconsequently causing a recession, to continue with them.
A positive development for the president’s administration Joe Biden is that inflation is going down and that could lead the Fed to make a last rate hike at the next meeting in Mayand then keep holding them in a restrictive range for a while before cutting them back.
As reported on Wednesday by the Bureau of Labor Statistics (BLS) under the Department of Labor, the Consumer Price Index (CPI) chained its ninth consecutive drop in March, registering a rate 5% YoY, a percentage that had not been registered since June 2021.
“The report shows the progress in our fight against inflation“Biden said in a statement released yesterday by the White House.
The president stressed that “gasoline prices fell more than $1.40 since last summer (boreal) and warehouse prices fell in March for the first time since September 2020.”
“In recent months we have also seen declines in products such as used cars, smartphones and other electronics. Although inflation is still very high, this progress means a higher air for workers, with their (real) wages higher than they were 9 months ago“, added the US president in a message in which he rejected the “reckless proposals” of Republican congressmen “to cut taxes for the rich and large corporations.”
To the CPI, today was added the Producer Price Index (IPP) which calculates the variation in wholesale prices, another piece of information that the FED takes into account for its decisions, as stressed by the president of the FED, Jerome Powell. at the beginning of the year.
According to the index, also published by the Labor Department, wholesale prices fell 0.5% monthly in March, the biggest drop since the pandemic began, thanks to the decrease in gasoline prices.
The data was lower than expected by economists. If the annual comparison is taken into account, wholesale inflation was 2.7%, the lowest in more than two years.
The Fed’s monetary adjustment is also beginning to be felt in the employment market: requests to apply for unemployment benefits grew in the last week for the first time in 21 days.
According to data released Thursday, applications grew by 11,000 to reach 239,000 in the week which ended on April 8.
The United States is currently facing a unemployment rate at record lows with a job offer that far exceeds the number of unemployed.
A moderation in employment will be welcomed by the Fed, as it sees it as an inflationary factor.
Source: Ambito
