Dec 23, 2022 - Politics & Policy

Raimondo channels CEOs' case for holiday cheer

Commerce Secretary Gina Raimondo speaks at a conference

Raimondo speaks at a conference in April. Photo: Drew Angerer/Getty Images

Commerce Secretary Gina Raimondo is broadcasting in public what she hears in private from top CEOs: The economy can avoid a recession.

Why it matters: After defying political expectations in 2022, team Biden is taking a victory lap on the economy — and wants to drown out any recessionary chatter in 2023.

What they're saying: “By and large, people are reasonably optimistic,” Raimondo told Axios in an interview. "I talk to CEOs every week, across industries, across sizes ... little, big industrials, retail, banks.”

  • “I talk to airline CEOs, and they will say: If I just did my business every day — and didn't read the newspaper — I would never be using the word 'recession.'"
  • "No one's gearing up for a bad year. And some people, depending on what they sell, are gearing up for a great year," she said.

The backstory: After the economy contracted in the first two quarters of the year, talk of a recession bubbled up on financial networks all summer, with the White House getting roped into discussing the technical definition of a recession.

  • In October, President Biden allowed that "a very slight recession" was possible, but downplayed the likelihood.
  • Later that month, the Commerce Department reported that the economy grew at a 2.6% annual rate in the third quarter. On Thursday, those figures were revised upward, with growth at 3.2%.
  • Job growth has stayed strong, for an average monthly gain of 272,00 jobs over the last three months.

Zoom in: While retail sales disappointed in November, suggesting a subpar holiday shopping season, consumer confidence spiked this month to the highest level since April.

  • Readers of the Axios Macro newsletter are cautiously optimistic, Axios' Neil Irwin and Courtenay Brown reported Wednesday.
  • The 800 respondents for the "Axios Macro Consensus" anticipate continued overall economic growth, and see recession odds as a 50/50 proposition.

Reality check: While inflation has dropped from June's peak of 9.1% to 7.1% in November, top officials know they have more work to do.

  • “There are concerns about certain sectors of the economy like housing [and] tech,” Raimondo said. “Tech over-hired.”
  • Earlier this month, Biden acknowledged that “prices are still too high" — but insisted that "things are getting better, headed in the right direction."

While White House officials talk of avoiding a recession, Fed chair Jay Powell is much less optimistic.

  • “I wish there [was] a completely painless way to restore price stability,” he said at a press conference earlier this month, after the Fed raised rates by half a percent. “There isn't."

What we’re watching: Raimondo, 51 — who, before joining the adminsitration, was Rhode Island's first woman governor — has faced criticism from the left for keeping an open line to CEOs. The American Prospect tallied that she met with an average of one corporate executive a day.

  • That outreach, coupled with her frequent conversation with big banks, has fueled speculation that she’s angling to replace Treasury Secretary Janet Yellen, if there’s a big economic team shake-up.
  • Asked directly about her Treasury intentions, Raimondo responded: “My answer on and off [the record]: I don't want the job. I have a job. I like the job. Janet is doing her job. She's fantastic.”

The bottom line: Biden officials know they aren’t out of the woods yet — especially heading into a likely presidential campaign that Republicans will contest, in part, on the economy. A recession, mild or severe, is still possible.

  • But at the moment, Team Biden is breathing a sigh, especially compared to last year.

“Every single CEO I talk to says supply chains are so much better,” Raimondo said. “It was a much more stressful time a year ago than it is now.”

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