Prices are rising in the US at the fastest rate in four decades. The Fed raised interest rates again. And new data showed the American economy shrank for a second consecutive quarter, intensifying fears of a recession and handing Republicans a potent line of attack just months before the midterm elections.

For embattled Joe Biden, Thursday’s gross domestic product figures were the latest in a string of worrying economic developments clouding his presidency this week. The news came as Democrats celebrated a breakthrough on the president’s long-stalled economic agenda after Senator Joe Manchin announced his support for a version of the plan in a shock reversal for the West Virginia holdout.

With control of Congress in the balance, Republicans seized on the turn of events to accuse Democrats of deepening economic disarray with their spending plans. Widespread pessimism about the state of the economy has shaped up to be Biden’s biggest political vulnerability, weighing down his approval ratings and threatening Democrats’ chances in November.

Moments after the Bureau of Economic Analysis published the highly anticipated GDP report on Thursday morning, Republicans declared the economy well into the throes of “Joe Biden’s recession” and blamed Democrats’ policy initiatives for making life costlier for Americans.

“Biden and Democrats are responsible for our shrinking economy, and they’re only trying to make it worse,” said Ronna McDaniel, chairwoman of the Republican National Committee.

GDP, the broadest measure of economic activity, fell by an annual rate of 0.09%, following a 1.6% annual decline in the first three months of the year, according to the commerce department. The numbers recorded two consecutive quarters of declining economic output, a common – but not official – definition of recession.

On Thursday, Biden dismissed fears that the US was in a recession, arguing that the economy was “on the right path”.

“There’s going to be a lot of chatter today on Wall Street and among pundits about whether we are in a recession,” Biden said on Thursday afternoon. “But if you look at our job market, consumer spending, business investment, we see signs of economic progress in the second quarter as well.”

In anticipation of the report, the White House has sought to convince Americans that two quarters of economic decline does not necessarily mean the US is in recession, particularly because unemployment remains low, job growth robust and household savings elevated.

Biden stressed those sources of strength in the economy during an earlier appearance on Thursday, concluding: “That doesn’t sound like a recession to me.”

The president also urged Congress to move quickly to pass his economic agenda that the White House argues will help ease the financial burden on American households by lowering the costs of healthcare and prescription drugs.

Biden did pause to take a victory lap on Thursday, interrupting his meeting with the CEOs of five US businesses to announce that the House had enough votes to pass a sprawling bipartisan package designed to strengthen American manufacturing and increase the US’s competitiveness against China.

The bill, which next goes to his desk for signatures, will “make cars cheaper, appliances cheaper, and computers cheaper”, Biden said in a statement. “It will lower the costs of every day goods.”

But Republicans said the Democrats’ climate, healthcare and tax plan, formerly known as “Build Back Better” and recast as the “Inflation Reduction Act”, would only cause further financial hardship, especially after they passed a $1.9tn coronavirus relief package last year.

“The definition of insanity? Doing the same thing over and over and expecting different results,” the Republican congressman Vern Gale Buchanan of Florida wrote on Twitter. “Yet here we are now entering a recession and Democrats are trying to spend hundreds of billions of dollars on Green New Deal priorities and raise taxes on America’s job creators.”

Soaring inflation – now running at 40-year highs – led the Federal Reserve on Wednesday to increase interest rates in an effort to bring down prices, the second such increase in just over a month.

Labelling the downturn a recession may be more politically charged than economically precise. Recessions are officially declared by the National Bureau of Economic Research, a private research group, and usually only after the decline is over.

“Bottom Line,” Diane Swonk, chief economist for KPMG, said on Twitter, “We are not in a recession – yet. But the current environment is [not] healthy. The cure will be painful but is necessary to avoid an even worse outcome. Rock & hard spot. Scars likely. Hard.”

The treasury secretary, Janet Yellen, said the US economy is in a state of transition, from a period of fast-paced growth to a period of more sustainable growth.

Recession, she explained, is generally viewed as a “broad-based weakening of our economy” that includes “substantial job losses and mass layoffs, businesses shutting down, private sector activities slowing considerably”.

“That is not what we are seeing right now,” she said.

Yet even without an official determination of whether the US is in a recession, polling has found that most Americans believe it is: something likely to cause Democrats pain at the ballot box in November’s crucial elections.

According to a recent CNN poll, 64% of Americans “feel” the economy is in recession, including 56% of Democrats and 63% of independents. The same survey found that four in 10 view the economy as “very poor”, an 11-point rise since the spring.

Biden defended his administration’s actions, arguing that the economic stimulus plan was “the reason why we still had teachers in school, kids going to school, the reason why we had cops on the beat, the reason we had essential workers,” during the depths of the pandemic. But he admitted that the “vast majority of Americans have no idea what the recovery plan did”.

Now, with their congressional majorities hanging in the balance, Democrats must persuade voters to trust their economic leadership as they rush to pass Biden’s economic agenda, which they vow will help, not hurt American pocketbooks.

Manchin, who just weeks ago appeared to walk away from his party’s economic plans over concerns that it would worsen inflation, said his newfound support for the measure was based on assurances that it would not.

Explaining his decision, Manchin told reporters: “This is truly going to be around inflation reduction.”