U.S. GDP Report Updates: Lawmakers Celebrate Congress Passing CHIPS Act

Live Updates
  • The latest Gross Domestic Product report showed the U.S. economy shrank 0.9 percent in the second quarter between April and June.
  • The GDP shrank 1.6 percent in the first quarter, January to March, of 2022.
  • By one common but unofficial definition—two consecutive quarters of contraction—the economy has entered a recession.
  • However, White House officials stress that a recession is officially defined by several factors, including the labor market and incomes.
  • Today, President Joe Biden called on Congress to pass the Inflation Reduction Act of 2022, while repeating he doesn't believe the U.S. is in a recession.
  • The Fed hiked its interest rate 0.75 percent Wednesday to tackle high inflation.

Live Updates Have Ended.

Lawmakers Celebrate Congress Passing CHIPS Act

Lawmakers on both sides of the aisle celebrated after the CHIPS and Science Act passed in the House of Representatives on Thursday.

The legislation, which now awaits President Joe Biden's signature, will expand the nation's production of semiconductors, with tax credits and other incentives built in for companies that choose to do business in the United States.

The bill received bipartisan support in the House and Senate. Republican and Democratic lawmakers posted messages applauding the bill's passage on social media Thursday evening after it cleared a House vote.

The bill "will lower costs, increase American manufacturing, invest in science, and help fix our semiconductor crisis," Senate Majority Leader Chuck Schumer tweeted.

The bill "is exactly what we need to be doing to grow our economy right now," Biden said in a statement released by the White House. "By making more semiconductors in the United States, this bill will increase domestic manufacturing and lower costs for families. And, it will strengthen our national security by making us less dependent on foreign sources of semiconductors," he said.

Texas' Republican Governor Greg Abbott said the bill's passage was "Great news!"

"This legislation will leverage our state's investments in the semiconductor industry & encourage more companies to operate in the Lone Star State," Abbott said on Twitter.

Massachusetts Senator Elizabeth Warren, a Democrat, also greeted the news of the legislation's forward momentum as "a big economic win" that she said will lead to "good union jobs and lower consumer costs."

Republican Senator Rob Portman of Ohio said the CHIPS Act's passage "means we are one step closer to bringing more semiconductor manufacturing back to the U.S." while semiconductor company Intel's investment in his home state "is closer to reality."

"This bill also protects our national security and I urge @POTUS to sign it quickly," Portman tweeted.

Manchin, Schumer Deal Could Lower Prescription Costs

The Inflation Reduction Act of 2022 features a path for Medicare to negotiate prescription drug prices, which lawmakers say will lower costs for American consumers.

Lowering prescription costs has been an agenda item for President Joe Biden throughout his time in office. Senators included the objective in the new piece of legislation targeting inflation, which Senate Majority Leader Chuck Schumer and West Virginia Senator Joe Manchin said they reached an agreement on earlier this week.

In addition to addressing inflation, the bill will "lower the cost of health insurance and prescription drugs," Manchin said in a statement announcing his support for the legislation on Wednesday.

Schumer said Democrats "will take on Big Pharma and lower prescription drug prices" through their support for the bill.

Biden praised the deal Schumer and Manchin reached during public remarks he delivered Thursday afternoon. The legislation "finally delivers on the promise that Washington has made for decades" about granting Medicare "the power to negotiate for lower prescription drug prices, which means seniors and consumers will pay less for their prescription drugs," Biden said.

Medicare will save an estimated $290 billion in the process, Biden said, and the bill also introduces a $2,000 annual cap on prescription costs for people on Medicare.

Gen Z Workers Outpace Older Workers in Saving

Generation Z workers are saving an average of 14 percent of their income for retirement, according to a BlackRock report obtained by CNBC.

The percentage is higher than the average 12 percent of income that older generations save, the study said.

Researchers identified Generation Z workers as those ages 18 to 25. The study's findings about the 12 percent average for older workers covered those ages 26 to 75 in the millennial, Gen X and baby boomer categories.

Despite the larger percentage of income saved by younger American workers, the number of workers worried about saving enough for retirement has fallen in the last year. According to a BlackRock overview of the report's findings, about 63 percent of all workers who save money for retirement said they felt as if they were "on track for retirement," a 5 percent decline from 2021.

As the U.S. battles inflation, the study also found inflation to be an issue of concern among about 87 percent of workers who are saving for retirement. Far fewer—about 37 percent—"reported having a strong understanding" about inflation's impacts, BlackRock said in a Monday tweet.

Many Workers See Wage Gains After Job Change

About 6 in 10 workers who moved to a new job between April 2021 and March 2022 experienced an increase in their wages, according to new survey data from Pew Research Center.

The nation's largest surge in worker resignations in decades occurred during that block of time, which analysts have referred to as "the Great Resignation."

Pew researchers said workers who resigned from their posts don't necessarily begin a new position the next month, but "the majority of those switching employers are seeing it pay off in higher earnings." Researchers added that this increase was reported in spite of high inflation, which "has eroded real earnings for many others."

Only about 47 percent of workers who stayed in their jobs between April 2021 and March 2022 saw an increase in their earnings, the survey said.

The survey found the resignation surge may continue in the months to come, with about 1 in 5 survey respondents indicating they may seek employment with a new company at some point over the next six months. Even so, 37 percent of all U.S. workers were doubtful about the ease with which they would be able to find a new position, even as economic experts have said the labor market is strong.

Now Hiring sign in Virginia
A man walks past a "now hiring" sign posted outside of a restaurant in Arlington, Virginia on June 3, 2022. OLIVIER DOULIERY/AFP via Getty Images

Yellen Says Economy is in a 'New Phase'

Treasury Secretary Janet Yellen said the U.S. economy has entered a "new phase" amid concerns that we have entered a recession.

During a press conference Thursday, Yellen echoed Biden's statements that the U.S. has entered a new phase in its economic recovery focused on achieving "steady sustainable growth" without sacrificing the gains of the last 18 months.

She said growth is slowing globally, inflation remains unexpectedly high, and it "remains this administration's top priority to bring it down."

"We are in an important moment for our economy that presents an opportunity for us all to take stock," she said during a press conference Thursday.

After the pandemic, Yellen said the U.S. experienced a "historic" economic recovery driven by the Biden administration's policies, including the American Rescue Plan and the COVID-19 vaccine rollout.

She said the economy remains "resilient" in the face of global challenges.

The newly-announced Inflation Reduction bill will help ease inflationary pressures, lower healthcare, prescription drug and energy costs while reducing the national deficit, Yellen said.

"These efforts are long overdue, Congress should pass immediately," she said.

Despite the recent GDP report, Yellen said the U.S. is not in a recession.

She said most economists and most Americans have a similar definition of recession; "substantial job losses and mass layoffs, businesses shutting down, private sector activities slowing considerably and family budgets under immense strain."

"In sum, a broad-based weakening of our economy," she said. "That is not what we are seeing right now."

Yellen cited job creation, strong household finances, growing businesses and continued consumer spending.

"In the context of today's [GDP] report, it is important to look beyond the headline number to understand what's happened," she said, adding that contraction in GDP is driven primarily by change in private inventories, a volatile component of GDP that subtracted two percentage points off quarterly growth.

"Overall, with a slowdown in private demand, this report indicated an economy transitioning that is to more steady, sustainable growth," she said. "This path is consistent with one that eases inflationary pressures while maintaining the labor market progress of the last 18 months."

Yellen said the Treasury Department will keeping a watch on the war in Ukraine, COVID-19 lockdowns in China and pandemic-related supply chain issues.

"These factors make predicting future difficult and must be clear-eyed and vigilant about threats they pose," she said.

Data Shows Travel 'Resilience,' Marriott CEO Says

Marriott CEO Anthony Capuano said his company sees "evidence" of the "resilience of travel" as the world moves further into the endemic stage of the COVID-19 pandemic.

Capuano was among the handful of business leaders called to speak with President Joe Biden about the economy on Thursday.

Capuano expanded upon the current status of the travel industry. Though the travel industry was hit hard by shutdowns and restrictions put in place during the pandemic, "I think what we've learned over the last couple of quarters is really the resilience of travel," Capuano said.

"When we look at our forward-looking data, we see real evidence of that resilience," he said.

Capuano said Marriott assesses trends in leisure, business and group travel, and has identified leisure travel as "clearly" leading the industry's recovery.

"In fact, last year leisure demand got back to where we were, pre-pandemic," he said.

There is also "real recovery" in the business and group travel areas, with "continued improvement" as the number of people returning to office spaces ticks upward.

"Maybe the biggest surprise has been the pace at which group demand has come back," Capuano said, adding that Marriott expected this uptick due to the number of social events that were canceled or postponed due to the pandemic.

"We fully expected social group to recover quickly, with all of the canceled weddings and bar mitzvahs and family reunions," he said. "But now we're seeing strong and consistent recovery in business group travel, as well." The recovery in travel Marriott has seen thus far is "quite encouraging," he added.

The "deep, pent-up demand" for travel that accumulated during the pandemic is in part responsible for the industry's recovery, Capuano said.

JP Morgan Strategist Says U.S. is Not in Recession

Despite Thursday's GDP report, some economists continue pushing back on declarations of a recession.

JP Morgan global market strategist Elyse Ausenbaugh told Yahoo! Finance that a decline in GDP is not the only sign of a poor economy.

The definition of a recession is two consecutive quarters of negative GDP growth, Ausenbaugh said. The U.S. GDP dropped 1.6 percent in the first quarter and another 0.9 percent in the second quarter. But she added that the National Bureau of Economic Research (NBER) is the institution that formally declares if the U.S. economy is in recession. The NBER looks at many other factors besides the GDP.

The main focuses, Ausenbaugh said, include the labor market strength, consumer spending and unemployment.

She said the U.S. added a million more jobs in 2021 than it did through all of 2019, but the market is slowing. Consumers are still spending in real terms and credit card delinquencies remain at all-time-lows.

Ausenbaugh said this is "an encouraging sign that, although the window is narrowing, we are not yet in that recessionary-type scenario that we are watching for that could potentially play out."

Spending is Up This Year, Bank of America CEO Says

Americans who bank with Bank of America are "spending more" now than they did this time last year, CEO Brian Moynihan said Thursday.

Bank of America customers spent 10 percent more in the first 25 days of July than they did during the same time period in 2021, Moynihan told President Joe Biden on Thursday during a roundtable discussion with other CEOs.

"That's consistent with what we saw in the whole second quarter, and earlier this year," he said.

Moynihan said Bank of America has 60 million consumers, with 35 million core checking accounts and health accounts. The bank balances of those consumers "are much higher than they were in the pandemic," he said, with additional growth seen from June to July of this year.

Bank of America's credit card statistics are "better than they've ever been," which Moynihan credited to the bank's customers under borrowing, as well as to their low delinquency rates.

While Bank of America customers spent money on material goods during the early months of the pandemic, Moynihan said that trend is shifting toward travel and experiences.

Moynihan then told Biden Bank of America customers are spending more money than they typically do on gas, due to high prices across the U.S. Bank of America customers are also concerned about inflation and the high cost of rent, he said.

AAA Warns Decline in Gas Prices May Not Last

The national average price of a gallon of regular unleaded gas dropped again on Thursday, but the American Automobile Association (AAA) warned the decline seen in recent weeks might not last.

Citing information from the Energy Information Administration, AAA said "gas demand increased" in the last week. Demand is still lower than this time last year, "but it could pressure pump prices and slow price decreases if the trend holds."

The national average gas price is about $4.28 today, an 8-cent decrease from Monday and about 74 cents below the new national average record set in June.

California, the state that typically has the highest statewide average gas prices in the nation, recorded a statewide average gas price of $5.66 on Thursday. Five other states also recorded statewide average prices above $5 on Thursday.

Top 5 States With the Most Expensive Gas Today:

  • California: $5.66
  • Hawaii: $5.48
  • Alaska: $5.17
  • Oregon: $5.11
  • Nevada: $5.11

Top 5 States With the Cheapest Gas Today:

  • Texas: $3.78
  • South Carolina: $3.78
  • Georgia: $3.83
  • Mississippi: $3.84
  • Tennessee: $3.86

Biden Gets Economic Update From CEOs

President Joe Biden is set to meet with business leaders at the White House Thursday after the latest GDP report was released.

Biden will receive an update from the CEOs of several companies on the economic condition across key sectors and industries.

The president is expected to deliver remarks at the top of the roundtable meeting, which was scheduled to begin at 2:15 p.m. ET.

The remarks will stream live on the White House website or watch live below:

Biden Calls on Congress to Pass Inflation Bill

President Joe Biden calls on Congress to pass the Inflation Reduction Bill of 2022.

While it's not exactly the same as his Build Back Better plan, Biden said this bill has much of the same provisions he promised to implement.

He said the bill will lower health care costs, make key investments in energy security and clean energy solutions and ensure large corporations pay their fair share in taxes.

Biden said experts, like climate activists and former Vice President Al Gore and progressive leader Senator Elizabeth Warren, support the bill. He said Warren agreed the bill will reduce inflation pressures on the economy and "put the country on stronger economic footing."

This bills gives Medicare the power to negotiate prescription drug prices, allowing consumers to pay less for medication.

Biden said this bill will be a "Godsend" to families dealing with cancer and other long-term illnesses.

The bill will also invest $369 billion to address the climate crisis and bring down family energy bills. It will offer rebates and tax credits for Americans to buy energy-efficient appliances and electric vehicles.

Major tax credits will also create "thousands of good-paying jobs" in manufacturing and clean energy production.

Biden said this bill "would be the most significant legislation in history to tackle the climate crisis and improve our energy security right away."

The bill will also require large corporation to "begin to pay towards their fair share in taxes" and bring down the deficient by over $300 billion. Biden promised to not raise taxes for people making less than $400,000 a year.

"I know it sometimes seems nothing gets done in Washington," Biden said. "The work of the government can be slow and frustrating and even infuriating."

But with this legislation, Biden said hard work is paying off. This legislation is "facing up to some of our biggest problems" and is "taking a step forward as a nation."

While the bill is "far from perfect," Biden said, it's a "compromise."

"That's often how progress is made," he said, "by compromises."

Biden's message to Congress is simple: "This is the strongest bill you can pass to lower inflation, cut the deficit, reduce health care costs, tackle the climate crisis and promote energy security, all the time while reducing the burdens facing working class and middle class families. So, pass it."

"Pass it for the American people," he said. "Pass it for America."

'Doesn't Sound Like a Recession to Me,' Biden Says

President Joe Biden disputed that the U.S. has now entered a recession after the latest GDP report out on Thursday showed the national economy shrunk for the second quarter in a row.

Biden addressed the latest GDP report while speaking publicly about Senate Democrats' recent agreement to move forward with legislation aimed at tackling inflation. His comments came the day after Federal Reserve Chair Jerome Powell announced the Federal Reserve was raising interest rates by three-quarters of a percentage point for a second time, marking the fourth interest rate increase since March.

On Wednesday, Powell said he does not believe the U.S. economy is "currently" in a recession and said the Federal Reserve will not be making any judgment calls as a result of Thursday's GDP report.

"Both Chairman Powell and many of the significant banking personnel and economists say we're not in recession," Biden said Thursday. The president said the U.S. has "a record job market" and "record unemployment" with about nine million jobs created thus far over the course of his presidency.

Business are also "investing in America at record rates," with several semiconductor investments in particular "already announced" by multiple companies. Those investments are "powering the strongest rebound in American manufacturing in over three decades," he said.

"That doesn't sound like a recession to me," Biden said.

Biden speaks on Inflation Reduction Act
President Joe Biden speaks about the Inflation Reduction Act of 2022 in the State Dining Room of the White House in Washington, D.C., on July 28, 2022. MANDEL NGAN/AFP via Getty Images

Obama Is 'Grateful' for Democrats' 'Progress'

Former President Barack Obama commented on the recent steps Democrats have taken to move forward with top legislative issues in a statement posted Thursday on Twitter.

He said this final week of July "has been a big week" for President Joe Biden's administration and for Congressional Democrats. His comments came less than 24 hours after Senate Majority Leader Chuck Schumer and West Virginia Senator Joe Manchin announced they had reached a deal on an inflation bill, called the Inflation Reduction Act of 2022.

"First, Congress is on track to pass a bipartisan bill that will lower the cost of everything from cars to consumer goods, and make us less dependent on foreign semiconductors," Obama's Twitter thread said.

"Then President Biden and Democrats in Congress announced a deal that will fight inflation by reducing the cost of prescription drugs, cutting the deficit, and making the biggest investments in history to boost clean energy and tackle the climate crisis," he continued, referring to the recent agreement between Schumer and Manchin.

Obama then said he was "grateful" for the recent progress, which he said can take time.

"I'm grateful to President Biden and those in Congress – Democrat or Republican – who are working to deliver for the American people. Progress doesn't always happen all at once, but it does happen – and this is what it looks like," his statement concluded.

Republicans Blast 'Joe Biden's Recession'

Republicans are blaming President Joe Biden for the latest GDP numbers.

House Minority Leader Kevin McCarthy of California said Thursday's GDP report showed "what every American has been feeling for nearly a year—we are in a recession."

Republican Senator Ted Cruz of Texas is eagerly awaiting a Republican in the White House, tweeting January 2025 "can't arrive sooner."

"To paraphrase Reagan, a recession is when your neighbor loses his job. Depression is when you lose yours. And recovery is when Joe Biden loses his," he said in a tweet.

Senate Republicans trolled Biden with a video of Biden and other pundits and politics talking about the recession as if it was the opening title sequence for the hit HBO show "Succession."

The video includes a similar filter, font and theme song for "Succession," a comedy-drama that follows the dysfunctional Roy family as they fight over control of their global media and entertainment conglomerate.

Watch Biden's Remarks on Inflation Bill

President Joe Biden is expected to deliver remarks on the Inflation Reduction Act of 2022 at noon.

The proposed legislation aims to reduce the deficit, lower prescription drug costs and provide tax credits to companies that take steps to address climate concerns.

In a Wednesday statement, Biden said the U.S. "will pay for all of this by requiring big corporations to pay their fair share of taxes, with no tax increases at all for families making under $400,000" annually.

"This is the action the American people have been waiting for," Biden said in his statement. "This addresses the problems of today – high health care costs and overall inflation – as well as investments in our energy security for the future."

Watch the president's remarks on the proposed legislation below or on the White House's website.

Jobless Claims Top 250,000 for Second Week

The U.S. Department of Labor's latest unemployment report released Thursday morning said 256,000 workers filed for unemployment in the week ending on July 23.

The number is a small decline from the number of jobless claims filed the week prior, but is the second week in a row that the total number of unemployment claims have exceeded 250,000. The 261,000 workers who filed for unemployment in the week ending on July 16 marked the largest number of unemployment claims reported since late 2020, according to the Associated Press.

The Labor Department's weekly report identified the four-week moving average number of unemployment claims as 249,250. That total represents an uptick in the weekly average of 6,250 claims, compared with the prior week.

Unemployment has overall been low in the U.S. so far this year, nearing its lowest mark in decades. Employers have added about 375,000 jobs to the U.S. economy in the last three months, which the Labor Department has said shows as "strong, steady job growth." For fourth month in a row, the unemployment rate has stayed at about 3.6 percent, according to the AP.

Small Business Committee Blasts Biden on GDP Report

The Republican House Committee on Small Business called out Congressional Democrats for trying to spin the latest GDP numbers.

"As Biden and his Democrat allies in Congress busy themselves with changing the definition of a recession, Americans continue to shoulder the burden of troublesome economic conditions," Ranking Member Blaine Luketkemeyer of Missouri said in a statement.

"Two consecutive quarters of economic decline is a recession. This is reality. Washington Democrats will try to spin these numbers in circles, but the hard facts cannot be redefined to meet a political agenda," he said.

Biden Says Economy is 'On the Right Path'

President Joe Biden said the new GDP report is "no surprise."

"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," he said in a statement Thursday.

Amid "historic global challenges," Biden said the country is "on the right path." He said the U.S. will "come through this transition stronger and more secure."

Biden said that the job market "remains historically strong," noting low unemployment, massive job creation and growing consumer spending.

"My economic plan is focused on bringing inflation down, without giving up all the economic gains we have made," Biden said.

Manchin, Schumer Agree on Inflation Reduction Bill

Democratic Senator Joe Manchin of West Virginia has reached a deal with Senate Majority Leader Chuck Schumer on a new bill to fight health care costs, inflation and climate change.

After months of negotiations, Manchin announced Wednesday night that he will vote on the Inflation Reduction Act of 2022 that will address the nation's biggest economic, energy and climate problems by reducing inflation, lowering the national debt and lowering healthcare costs.

"We must be honest about the economic reality America now faces if we want to avoid fanning the flames of inflation," he said in a statement. "At its core, the purpose of reconciliation is to get our economic and financial house in order."

He added that the U.S. can not "spend its way out of debt or inflation."

Manchin said he "worked diligently" to get input from Republicans on the Democrats' legislation.

The bill will lower the cost of health insurance and prescription drugs along with reducing the national deficit. It would also adopt a new tax policy that protects small businesses and the working class while ensuring corporations and the wealthy pay their fair share in taxes, Manchin said.

Manchin said the bill will also combat global climate change through "common sense solutions" that will allow the U.S. to decarbonize while ensuring energy is "affordable, reliable, clean and secure." This bill is also a step towards U.S. energy dependence from Europe.

With this newly proposed bill, Manchin said President Joe Biden's Build Back Better agenda is "dead."

"Instead we have the opportunity to make our country stronger by bringing Americans together," he said. "I will do everything I can to usher in a new era of compromise and commonsense that will make America more energy secure, financially sound and a more united country for this generation and the next."

Manchin then called on his Congressional colleagues to put politics aside to pass this legislation.

"The question for my colleagues is whether they are willing to put their election politics aside and embrace the commonsense approach that the overwhelming majority of the American people support and will best serve the future of this nation," he said.

President Biden said he supports the Inflation Reduction Act.

"If enacted, this legislation will be historic, and I urge the Senate to move on this bill as soon as possible, and for the House to follow as well," he said in a statement after speaking to Manchin and Schumer.

'We're Not Going to Be in a Recession': Biden on Monday

"We're not going to be in a recession," said President Joe Biden on Monday.

The White House has stressed that in the U.S., the National Bureau of Economic Research (NBER) is the official arbiter in defining recession. A more common, but unofficial, definition is based on consecutive quarters the economy shrank.

Biden is not alone in recent days of denying recession.

Joe Biden speaks in the Rose Garden
Joe Biden speaks in the Rose Garden of the White House in Washington, Wednesday, July 27, 2022. The president will have been anticipating the GDP figures for the second quarter, which are expected Thursday. AP Photo/Andrew Harnik

The Fed's chair, Jerome Powell, echoed those remarks on Wednesday.

At a news conference, Powell said the Federal Reserve stuck with the White House definition of recession as "a broad-based decline across many industries that's sustained for more than a couple of months." The economic situation "doesn't seem like that," he added.

Treasury Secretary Janet Yellen made similar remarks during a Sunday appearance on NBC's Meet the Press.

"We have a very strong labor market. when you are creating almost 400,000 jobs a month, that is not a recession," she said, adding she would be "amazed" if NBER declared "this period to be a recession."

U.S. Economy Is Giving Mixed Signals

Two difficult GDP reports so far in 2022, come after what was the fastest calendar-year expansion since 1984.

The U.S. economy grew 5.7 percent in 2021, as the economy roared back from pandemic recession of 2020.

Since then, high inflation, higher borrowing costs, and even fear of a recession have eroded consumer confidence and stirred anxiety AP reports.

Labor Department's consumer price index jumped 9.1 percent in June year-on-year, a pace not matched since 1981. While despite widespread pay raises, prices are surging faster than wages. In June, average hourly earnings, after adjusting for inflation, fell 3.6 percent year-on-year.

Meanwhile, 372,000 jobs were added in June—an indicator of economic resilience.

Breaking: U.S. Economy Enters 'Recession'

GDP for Q2 -0.9 percent year-on-year, the U.S. Bureau of Economic Analysis has announced; when adjusted for inflation, it fell 0.2 percent.

That means a second straight quarter of decline after the U.S. economy shrank at a 1.6 percent rate in the first quarter of 2022.

It means that the U.S. economy has entered a recession by one common, but unofficial, definition.

As the White House has stressed of late. The official classification is made by the National Bureau of Economic Research Analysis.

It defines a recession as a significant decline in economic activity over more than a few months, which is assessed using several indicators, including the labor market, consumer and business spending, industrial production, and incomes.

What to Know About the Inflation Reduction Act

Today's GDP report comes as Democrats are seeking to quickly pass a $739 billion inflation-fighting package though Congress.

Senate Majority Leader Chuck Schumer and holdout Sen. Joe Manchin surprised colleagues late Wednesday by announcing they had reached an agreement on a bill addressing climate change and healthcare.

The Inflation Reduction Act of 2022 sets aside $369 billion for climate change and energy spending, and aims to cut federal spending on prescription drugs by $288 billion by allowing Medicare to negotiate prices with pharmaceutical firms.

The package would reduce the federal deficit by about $300 billion, according a summary. It would also raise an estimated $451 billion in new tax revenue over a decade—most of it through a new 15 percent minimum tax on corporations (a potential stumbling block for another Democrat holdout, Kyrsten Sinema)

Democrats plan to pass the legislation through budget reconciliation, which allows them to bypass the 60-vote requirement to overcome a filibuster.

But that means they can't afford a single defection in the 50-50 Senate, where Vice President Kamala Harris can cast a tie-breaking vote.

GDP Revision: Adding to the Fog?

As we've been hearing, there are forecasts for Q2 GDP that are both positive and negative...

But the statistical release today could end up being close to zero, writes Newsweek's data editor Rob Minto.

Then there is an extra factor to throw into the mix: GDP revisions.The Bureau of Economic Analysis doesn't just give out one figure for GDP and leave it at that.

Rather, there are not one but two subsequent revisions to GDP figures.

As the Federal Reserve Bank of San Francisco put it: "The advance release of U.S. GDP growth... relies on incomplete reports and sophisticated statistical methods to fill in missing information. Over time, that missing information is replaced with hard numbers as they gradually come in."

Not all revisions are that significant. But the last set of statistics went from -1.4 to -1.6 percent from the first (advance) reading to the third.

If the GDP for Q2 comes in at 0.1 percent, the same revision would tip it from positive to negative growth.

While this is unlikely, it's worth watching the revisions. The second revision is on August 25, with the third on September 29.

In the past there have been significant revisions, such as the 1.2 percent change to GDP in second quarter 2020; However, this was during the COVID crisis when the economy slumped by over 30 percent in a quarter—an extreme situation.

Joe Biden Under Pressure on Economy: Poll

Joe Biden has come intense under pressure over his handling of the economy.

In a recent CNN poll, conducted by SSRS from June 13 to July 13, the president's approval rating on handling the economy was 30 percent. On inflation, it stood at 25 percent.

And Biden appears to losing support on the economy among Democrat voters.

The survey suggested 62 percent of Democrats approved of his handling of the economy, down from 71 percent in spring 2022. On inflation, 51 percent of Democrats polled approved, while 47 percent disapproved.

What Time Is GDP Report Expected?

The GDP report for the second quarter is expected to be released shortly.

The update delivered by the Department of Commerce was scheduled for 8:30 a.m. ET. We'll bring you the update right here.

Republicans Challenge White House 'Recession' Definition

The debate over defining a recession is not going away...

Republican senators have introduced a resolution that seeks to cement the "historic" definition of a recession as two "negative quarters of gross domestic product growth." (more on that here)

Although that is the most common definition of a recession, it's not the one that counts in the U.S.

The Biden administration has pointed to the definition by the National Bureau of Economic Research, a nonprofit group of economists, which says a recession is "a significant decline in economic activity that is spread across the economy and lasts more than a few months."

Texas Sen. Ted Cruz, who introduced the resolution with Sens. Tim Scott and Cynthia Lummis, said the White House is "undertaking an Orwellian effort that ignores history in order to try to redefine the actual definition of the term 'recession' in order to avoid bad headlines."

Scott added: "This administration can continue to push reckless spending proposals and insist the economy is moving in a positive direction, but Americans simply aren't taking the bait."

Representative Jim Jordan is among Republicans challenging the definition.

Atlanta Fed Model Predicts Recession

The Atlanta Federal Reserve's GDPNow forecasting model predicts that Q2 U.S. GDP will come in at -1.2 percent.

The model gives a so-called 'nowcast' of GDP, and in the last reading before the official number, predicts another quarter of contraction, which means a technical recession (as per the two quarters in a row rule).

The latest analysis from the Atlanta Fed is as follows:

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2022 is -1.2 percent on July 27, up from -1.6 percent on July 19. After recent releases from the US Census Bureau and the National Association of Realtors, the nowcast of the contribution of inventory investment to second-quarter real GDP growth increased from -2.50 percentage points to -2.30 percentage points, while the the nowcast of the contribution of the change in real net exports to second-quarter real GDP growth increased from 0.18 percentage points to 0.59 percentage points.

Any hopes for the Biden administration of avoiding a recession look pretty slim according to this, despite the nowcast going up from -1.6 to -1.2.

Atlanta Fed GDPNow July 2022
Federal Reserve Bank of Atlanta

Economists Expect Moderate GDP Rise: Survey

This could be good news for Joe Biden...

A new Bloomberg survey of economists suggests the U.S. economy had modest growth in the second quarter—averting a so-called technical recession (two quarters of contraction).

On average, economists involved predict GDP to grow an annualized 0.4 percent in the April-June period (or 0.1 percent rise on the previous quarter).

That would represent an improvement on the 1.6 percent fall in the first quarter.

However, the survey suggests new data might show consumer spending decelerated further in the second quarter, Bloomberg reports.

President Joe Biden has come under fire for his handling of the economy since the first quarter results were announced.

What Is the Definition of a Recession?

It depends who you ask...

  1. Consecutive Quarters of Economic Contraction is perhaps the most common definition of recession—but it's not the official one in the U.S. The U.S. economy shrank at a 1.6 percent rate in the first quarter of 2022. So another fall in Q2 figures would deem it a recession, by this definition.
  2. Ask White House officials and they'll likely point you to another definition, as set by the National Bureau of Economic Research Analysis. NBERA—the official recession scorekeeper—defines a recession as "a significant decline in economic activity that is spread across the economy and that lasts more than a few months," White House officials wrote last week. Based on this "holistic" look at economic activity—including the labor market, consumer and business spending, industrial production, and incomes.