President Biden doesn’t see a recession on the way, even though many economists do, and he explains why. We’ll also look at how Americans are powering through high prices and a new strategy to fight China’s economic influence.
But first, Rep. Madison Cawthorn’s (R-N.C.) latest ethics scandal involves cryptocurrency.
Welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Someone forward you this newsletter? Subscribe here.
Biden: Recession is not inevitable
President Biden on Monday acknowledged the United States is facing economic headwinds with high gasoline and food prices, but he rejected the idea that a recession is inevitable.
At a press conference in Tokyo, Biden rattled off a series of investments that have spurred job growth, including a new Samsung factory in Texas, a new Hyundai operation in Georgia and Toyota’s commitment in North Carolina.
“Now, does that mean we don’t have problems?” Biden asked. “We do. We have problems that the rest of the world has, but less consequential than the rest of the world has because of our internal growth and strength.”
The background:
- Biden has faced tremendous pressure from voters to tamp down inflation, even as the president and White House aides point to low unemployment, strong gross domestic product growth and other underlying factors that show the economy is strong.
- Polls have shown voters do not approve of Biden’s handling of the economy, and plunges in the stock market in recent days have only fueled concerns about a looming downturn.
The Hill’s Brett Samuels has more here.
SPENDING TIME
Americans keep spending despite record inflation squeeze
Despite high inflation, rising gas prices, deepening concern about the economy and rising recession risks, Americans keep spending money.
- Stocks have fallen sharply over the past week as Wall Street frets over a likely dip in consumer spending.
- Polls of consumer sentiment have fallen steadily — along with President Biden’s approval rating on the economy — and a growing number of economists fear a recession could come as soon as next year.
- The combination of higher interest rates from the Federal Reserve and prices lingering at inflated levels is likely to take a chunk out of consumer spending as the year continues.
Even so, Americans as a whole have powered through rising price pressures, shifting their purchases away from pricier goods and toward budget items and services. Sylvan explains why here.
FED UP
Biden’s Fed nominees sworn into office
President Biden’s Federal Reserve nominees were sworn in Monday, nearly filling out the central bank’s board of governors as it battles a record surge of inflation.
Federal Reserve Board Chairman Jerome Powell, Fed Vice Chair Lael Brainard, and board members Lisa Cook and Philip Jefferson began their terms Monday. The Senate confirmed the nominations of Powell, Cook and Jefferson earlier this month and confirmed Brainard in late April.
- Powell, a Republican, will serve another four years leading the Fed board after being renominated by Biden in November. Powell was elevated to Fed chair by former President Trump in 2017 and joined the Fed in 2012 as a governor after being nominated by former President Obama.
- Brainard, a Democrat, had served as a Fed governor since 2014 before Biden nominated her to serve as the bank’s No. 2 in November. While some Democratic lawmakers and progressive activists pushed Biden to nominate her over Powell, Biden opted to promote Brainard to the vice chair position instead.
Sylvan has more on this here.
NEW FRAMEWORK
Biden unveils Indo-Pacific economic framework to counter China
President Biden on Monday announced a new framework meant to guide U.S. economic involvement in the Indo-Pacific over the long term while in Japan as part of his first trip to Asia as commander in chief.
The Indo-Pacific Economic Framework for Prosperity (IPEF) aims to deepen trade ties between the U.S. and a dozen other countries signing onto it — Australia, Brunei, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam. Taiwan is not among the group, despite bipartisan calls from lawmakers that the island nation be included in the framework.
- The new pact aims to boost U.S. leadership in the region while countering China’s rise five years after former President Trump withdrew the U.S. from the Trans-Pacific Partnership Agreement, an Obama-era achievement that similarly aimed to bolster U.S. involvement in Asia.
- According to a White House fact sheet, the framework will focus on trade, supply chains, climate change and anti-corruption. The White House billed the new effort as a way to lower domestic inflation over the long term, something Biden has singled out as his top priority.
The Hill’s Morgan Chalfant has more here.
Good to Know
A record percentage of American adults said they were in solid financial shape at the end of last year even as surging inflation dented household budgets, according to a Federal Reserve survey released Monday.
Seventy-eight percent of U.S. adults said they were either doing “OK” financially or “living comfortably” in the final three months of 2021, according to the Fed’s Survey of Household Economics and Decisionmaking (SHED), an annual poll of how U.S. adults are faring economically.
Here’s what else we have our eye on:
- Meta, the newly formed parent company of Facebook, announced Monday that it is planning to give researchers access to more information about how political advertising can be targeted on its platforms.
- A group of vulnerable House Democrats is warning of spikes in ObamaCare premiums this fall, saying that enhanced financial assistance from last year’s relief bill needs to be extended.
- The Biden administration is in talks to tap into a federal diesel reserve to address energy shortfalls, an official with knowledge of the matter confirmed to The Hill on Monday.
That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow.