Donald Trump is pointing to data that forecasts an economic downturn much worse than a recession.
The former president, whose economic policies are credited with some of the best economic numbers in 40 years and record low inflation, made the remarks shortly before the second quarter GDP numbers were released. The data showed a two quarters of negative GDP growth which was the benchmark for the previous 10 recessions.
“Where we’re going now could be a very bad place,” Trump said at a rally in Arizona. “We got to get this act in order, we have to get this country going, or we’re going to have a serious problem.”
The former president singled out the collapse in Americans’ real wages, a historically depressed labor force participation rate, and the push for the Green New Deal at any cost that many say will further inhibit economic growth.
“Not recession. Recession’s a nice word. We’re going to have a much bigger problem than recession. We’ll have a depression,” the former president said.
The Bureau of Economic Analysis (BEA) released data showing that real U.S. GDP fell by an annualized 0.9 percent in the second quarter after contracting 1.6 percent in the first quarter.
Two consecutive quarters of negative GDP growth are the text book rule-of-thumb definition for a recession and have been for over six decades.
In his remarks, Trump joined a growing chorus blaming President Joe Biden’s handling of the economy, for record inflation.
“Biden created the worst inflation in 47 years. We’re at 9.1 percent, but the actual number is much, much higher than that,” Trump pointed out.
An alternative CPI inflation gauge developed by economist John Williams, using the same methodology used by the U.S. government in the 1980s, puts the figure at 17.3 percent, a 75-year high.
Trump also said that persistently high inflation combined with an economic slowdown has put the country “on the verge of a devastating” spell of stagflation, which is a combination of accelerating prices and slowing economic growth.
Inflation is “going higher and higher all the time,” Trump said, adding that it’s “costing families nearly $6,000 a year, bigger than any tax increase ever proposed other than the tax increase that they want to propose right now.”
In Trump’s first full month in office in February 2017, the headline Consumer Price Index (CPI) inflation gauge came in at 2.8 percent in annual terms. While the CPI measure fluctuated during his tenure, the highest it ever reached was 2.9 percent in July 2018, while in his final month in office, January 2021, inflation clocked in at 1.4 percent.
Under Biden, inflation has climbed steadily, soaring 9.1 percent year-over-year in June 2022, a figure not seen in more than 40 years.