Pundits, economists and policymakers are talking about the possibility of a recession and rising unemployment. Whether these dour predictions come to pass, it’s clear the economy is struggling. It’s also clear GOP obstructionism is preventing policymakers from addressing economic weaknesses and helping people in difficult times.

“Recession” is a somewhat fuzzy term, but it’s generally defined as two consecutive quarters of negative growth. 

GDP in the first three months of 2022 was down 1.5 percent. Current estimates have second quarter growth at a meager .9 percent. If that falls a bit, we’d meet the common technical definition of a recession. 

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What this means is that the federal government is no longer providing a cushion to protect from covid shocks. As a result the economy is slowing, which could lead us into a recession. Government spending has stalled out in large part because of inflation fears. In May the US annual inflation rate was 8.6 percent, the highest since 1981. 

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Usually, we think of recessions as a time of rising unemployment and joblessness. However, unemployment remains at historic lows. 

Unemployment rates have been at 3.6 percent for three months. US businesses added 390,000 jobs in May. And employers continue to report difficulty in filling positions. 

Pools, lakes and amusement parks have been unable to find lifeguards across the country. Fully one-third of public pools in the US may be shut down or have reduced hours because of staff shortages. 

An economy can still slip into recession with low unemployment. But it seems contradictory to have an economic slowdown and a hiring crisis at the same time. If there are so many open jobs, why aren’t people taking them and boosting the economy?

The answer is the same one it has been. 

We’re still in the middle of a pandemic.

Covid cases are rising. Hospitalizations are up 20 percent over the last two weeks. Deaths have stubbornly hovered around 300 a day. 

Though government, businesses and the public have largely pushed for normalcy, covid continues to affect the economy in numerous ways.

When people get sick, they miss work and often have to quarantine. People remain cautious about travel and large public gatherings. 

Congress initially responded to these economic shocks by trying to help those in need. The US passed multiple major spending bills, including a $1.9 trillion covid relief bill in March 2020. 

The government sent $1,400 checks directly to citizens. It provided funds to fight covid and protect people from the disease. It extended unemployment benefits. It also expanded the Child Tax Credit, sending direct payments to families in poverty with children. 

The stimulus spending was very successful. American’s real incomes increased. The economy grew faster in 2021 than in any year since 1984, adding 6.2 million jobs. Unemployment plummeted.

The Child Tax Credit expansion lifted millions of children out of poverty and cut monthly child poverty by about 30 percent.

The funds also spurred a massive vaccine rollout that saw half of the population receiving vaccines in six months. That achievement helped reduce cases and made the economic recovery possible.

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Following the initial bill, however, Congress refused to pass any further relief, even amidst further pandemic spikes. 

Republicans and conservative Democrat Joe Manchin killed Biden’s sweeping Build Back Better infrastructure bill. The same coalition has refused to provide further desperately needed funds to fight covid.

What this means is that the federal government is no longer providing a cushion to protect from covid shocks. As a result the economy is slowing, which could lead us into a recession. Government spending has stalled out in large part because of inflation fears. In May the US annual inflation rate was 8.6 percent, the highest since 1981. 

Conservatives insist that too much government spending has boosted prices. More spending would only cause more inflation, they argue.

The fact, though, is that US inflation rates are about the same as those globally. If every country is experiencing the same rising prices, it seems unlikely that relief funds in the US are the cause.

The main culprit is, again, covid. It has played havoc with supply chains, creating shortages of items like baby formula and tampons.

These shortages have been a major spur to inflation. 

Another contributor is the war in Ukraine and the embargoes on Russian oil. Gas prices have risen, as of this writing, to an average of $5 a gallon. The price spike harms less affluent consumers and is a drag on the economy as a whole. 

President Biden has limited control over Russia’s actions in Ukraine, and given the global nature of inflation, it’s unlikely that he can unilaterally bring down prices either.

The government could cushion the impact of these economic forces, however, as it did at the beginning of the pandemic. 

Restoring the expanded Child Tax Credit would directly help families struggling with higher grocery prices. More funds for existing boosters, PPE, testing, air filtration, Paxlovid treatments and developing the next round of nasal vaccines could help the country, and the world, defeat covid and its ongoing disruptions.

If we’re concerned that we can’t afford to make these investments, there are revenue options. Senators just added $45 billion to Biden’s defense budget; we could take that off and use it to pay for programs that would help people.  

Biden also has a plan to raise $1.5 trillion by taxing the richest 1 percent.

But Republicans won’t let the administration spend or raise revenue.

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Instead, the Federal Reserve has been left to respond to the economic doldrums virtually by itself. It has used the one tool it has, delivering a major interest rate hike in an effort to bring down inflation.

Raising rates makes borrowing more expensive and reduces consumer demand, which is intended to slow the economy. That could lead to a recession, especially if the Fed continues to boost rates, as it is expected to do in the next months.

Getting inflation under control is important. But so is lifting children out of poverty and defeating a virus that is still killing 1,500 people a week and is disrupting every aspect of life including the economy.

We’ve seen that the government has the ability to help people in crisis. Whether we’re struggling with inflation or a recession, we’re not powerless. Or we shouldn’t be. 

But Republicans are determined to shackle Biden and to immiserate working people. That keeps Biden’s approval low, which will benefit Republicans in the midterms. It also keeps average Americans from expecting too much, which pleases the GOP’s wealthy donors.

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