A string of strong economic data appears to have finally dented consumers’ poor sentiment about the U.S. economy, easing recession fears and potentially helping President Biden in his re-election campaign.
Mr. Biden has struggled to convince voters of the positive signs in the economy under his watch, including rapid job gains, low unemployment and the fastest recovery in economic growth from the pandemic recession of any wealthy country.
For much of Mr Biden’s term, forecasters warned of an impending recession. Consumers remained depressed and voters told pollsters they were angry at the president over the other big economic development of his time in office: a surge in inflation that peaked in 2022, with the fastest price growth in four decades.
Much of this narrative appears to be changing. After price growth lagged early in Mr Biden’s term, wages are now rising faster than inflation. The economy grew 3.1 percent from the end of 2022 to the end of 2023, exceeding expectations, including robust growth at the end of the year. The inflation rate is falling to historically normal levels. The US stock markets are recording record highs.
The Federal Reserve, which had sharply raised interest rates to curb price growth, signaled this week that it would likely begin cutting rates soon. “This is a good economy,” Jerome H. Powell, chairman of the Fed, whose central bank is independent of the White House, said at a news conference this week.
The Conference Board’s consumer confidence index has jumped in each of the past two months. A key part of it, as consumers assess their current economic situation, is approaching its most recent peak in February 2020, the eve of the coronavirus pandemic.
Friday also brought further signs that economic performance continues to fall short of expectations. The University of Michigan Consumer Sentiment Index skyrocketed. According to the Labor Department, employers added 353,000 jobs in January, the highest monthly figure in a year. It also revised its employment growth estimate upward by more than 100,000 jobs in December – to 333,000 – suggesting the labor market is accelerating even as unemployment is near its half-century low.
Mr. Biden celebrated the news.
“America’s economy is the strongest in the world,” he said in a statement Friday morning. “Today we saw more evidence.”
White House economic advisers have long expressed hope that continued strong economic data would eventually resonate with voters, especially after inflation has fallen and consumers have become accustomed to higher price levels.
They’re now talking openly about this coming true.
“Today’s report is another in a long line of unexpected gains for working Americans,” Jared Bernstein, chairman of the White House Council of Economic Advisers, said in an email Friday. “And as inflation eases, wages are significantly higher than prices, leading to more purchasing power. Importantly, confidence measures, including a 13 percent increase in January based on the UMich survey, suggest that people are reliably starting to feel these gains.”
The narrative shift is also evident in the way Mr. Biden’s critics talk about the economy. Some have scrutinized recent data for signs of weakness.
Alfredo Ortiz, president and chief executive of the Job Creators Network, a conservative advocacy group, said Friday that the jobs report “was not the slam dunk that Democrats and the mainstream media claim.” He noted that “employment in the mining, quarrying, and oil and gas extraction industries actually declined last month. This sector of the economy drives the American economy and provides jobs to support a family.”
Former President Donald J. Trump has gone further, suggesting that major recent stock market gains are because investors believe he will defeat Mr. Biden in November and return to office – a theory that few, if any, believe Wall Street economists support.
Asked on the Fox Business Network on Friday why stocks are rising when the economy is doing badly under Mr. Biden, Mr. Trump replied: “Because they think I’m going to get elected.”
All of this should help Mr. Biden in his likely rematch with Mr. Trump. But that is not the case yet. An Associated Press and NORC Center for Public Affairs Research poll this week found a slight improvement in Americans’ views on the economy, but not in Mr. Biden’s overall approval rating.
Some of this stubbornness is structurally embedded in American politics. Partisans are increasingly reluctant to attribute economic performance to a president from an opposing party — or even to admit that the economy is doing well when the other party is in power.
But part of it, Mr. Biden’s team acknowledges, is the remnant of high inflation. For example, gasoline prices have fallen. But food prices remain high after a huge jump in 2022 and 2023, although their rate of increase has slowed dramatically.
Fearing voter anger over high prices, Mr. Biden is trying to get grocery chains to lower prices. And that’s why his celebratory statement on Friday wasn’t a real victory lap.
“I will not stop fighting to lower costs and build an economy from the bottom up,” the president said.
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2024-02-02 17:36:08
www.nytimes.com
