BIDEN GOES FULL CHIP DILLER: Economy “on the right path.”

Is that how the economy feels to millions of American households — “on the right path”? As I predicted yesterday, Joe Biden has decided to stick to the Chip Diller playbook in response to today’s second consecutive negative GDP report. Biden insists that we need to stay his course regardless of the outcomes:

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. But even as we face historic global challenges, we are on the right path and we will come through this transition stronger and more secure. Our job market remains historically strong, with unemployment at 3.6% and more than 1 million jobs created in the second quarter alone. Consumer spending is continuing to grow. Earlier this week, I met with the Chairman of SK Group from Korea, just one of the companies investing more than $200 billion in American manufacturing since I took office, powering a historic recovery in American manufacturing.

My economic plan is focused on bringing inflation down, without giving up all the economic gains we have made. Congress has an historic chance to do that by passing the CHIPS and Science Act and Inflation Reduction Act without delay.

One has to wonder whether this response got written yesterday. Consumer spending is not “continuing to grow,” for instance; PCEs barely made it to positive territory at an annualized 1% growth rate, but spending in all goods categories contracted. One company may be investing in the US (from South Korea?), but domestic business investment fell in Q2 at an annualized 13.5% rate.

Another indicator of the “path” is real disposable income, and it’s clearly going in the wrong direction.

How will we know when the economy is recovering? That’s surprisingly easy to judge: