A string of strong economic data appears to have finally dispelled consumers’ sour mood toward the U.S. economy, allaying recession fears and potentially helping President Biden in his re-election campaign.
Mr. Biden has struggled to convince voters of positive signs in the economy under his leadership, including rapid job gains, low unemployment and the fastest rebound in economic growth since the pandemic recession of all rich countries.
For much of Mr. Biden’s term, forecasters warned of a looming recession. Consumers remained glum and voters told pollsters they were angry at the president for the other big economic development of his term: a surge in inflation that peaked in 2022, with the growth rate fastest price growth in four decades.
Much of this narrative appears to be changing. After lagging behind price growth early in Mr. Biden’s term, wages are now rising faster than inflation. The economy grew by 3.1% between the end of 2022 and the end of 2023, beating expectations, including robust growth at the end of the year. The inflation rate is falling toward historically normal levels. US stock markets are hitting record highs.
The Federal Reserve, which has raised interest rates sharply to curb price growth, signaled this week that it will likely begin cutting rates soon. “It’s 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, in which consumers assess their current economic situation, is approaching its recent high since February 2020, on the eve of the coronavirus pandemic.
Friday also brought fresh evidence that the economy’s performance continues to defy expectations. The University of Michigan’s consumer confidence index jumped. The Labor Department said employers added 353,000 jobs in January, the highest monthly number in a year. He also revised upward his estimate of employment growth in December by more than 100,000 jobs – to 333,000 – suggesting that the job market was accelerating even with unemployment near its lowest level in a half century.
Mr Biden celebrated the news.
“The U.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 strong economic data would eventually trickle down to voters, particularly once the inflation rate declines and customers become accustomed to lower levels of higher prices.
They now speak openly about the realization of this project.
“Today’s report is part of a long line of progress that exceeds the expectations of American workers,” Jared Bernstein, chairman of the White House Council of Economic Advisers, said in an email Friday. “And with inflation falling, we have wages well above prices, which means increased purchasing power. Importantly, confidence measures, including the 13 percent from UMich’s January survey, suggest that people are starting to feel these gains.
The shift in discourse is also evident in the way Mr. Biden’s critics talk about the economy. Some have resorted to examining recent data to spot any signs of weakness.
Alfredo Ortiz, president and CEO of the Job Creators Network, a conservative advocacy group, said Friday that the jobs report was “not the home run that Democrats and the mainstream media make it out to be.” He noted that “employment actually declined last month in the mining, quarrying, and oil and gas extraction sector. “This economic sector lubricates the American economy and provides jobs to support a family.”
Former President Donald J. Trump went further, suggesting that recent big gains in the stock markets are the result of investors believing he will defeat Mr. Biden in November and return to power — a theory that few many, if any, Wall Street economists agree.
When asked Friday on Fox Business Network why stocks were rising if the economy was doing poorly under Mr. Biden, Mr. Trump responded“Because they think I’m going to be elected.”
All of this should help Mr Biden in what will likely be a rematch against Mr Trump. But this is not yet the case. A Associated Press-NORC Center for Public Affairs Research Poll This week saw a slight improvement in Americans’ views on the economy, but not in Mr. Biden’s overall approval rating.
Some of this stubbornness is structural in American politics. Partisans are increasingly less willing to credit a president from an opposing party for his economic performance — or even to admit that the economy is doing well if the other party is in power.
But Mr. Biden’s team acknowledges that part of this problem is due to high inflation. For example, gasoline prices have fallen. But food prices remain high after a sharp rise in 2022 and 2023, although their rate of increase has slowed considerably.
Fear of voter anger over high prices is why Mr. Biden is trying to convince grocery chains to lower prices. And that’s why his celebratory statement Friday wasn’t a true victory lap.
“I will not stop fighting to cut costs and build an economy from the bottom up,” the president said.