by A string of strong economic data appears to have finally dispelled consumers’ sour mood about the U.S. economy, allaying recession fears and potentially helping President Biden in his re-election campaign.
Biden has struggled to convince voters of positive signs from the economy under his leadership, including rapid job growth, low unemployment and the fastest rebound in economic growth from the pandemic recession of any rich country.
For much of Biden’s term, forecasters warned of an impending recession. Consumers remained gloomy and voters told pollsters they were angry with the president for the other big economic event of his term: a rise in inflation that peaked in 2022, with the fastest rate of price growth in four decades.
Much of that narrative appears to be changing. After lagging behind in price growth early in 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, defying expectations, including strong 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 sharply raised interest rates to rein in price growth, signaled this week that it would likely begin cutting rates soon. “This is a good economy,” Jerome H. Powell, chairman of the Federal Reserve, whose central bank is independent of the White House, declared at a news conference this week.
The Conference Board’s consumer confidence index has increased in each of the last two months. A key component, in which consumers rate their current economic situation, is approaching its recent high from February 2020, on the eve of the coronavirus pandemic.
Friday also brought more evidence that the economy’s performance continues to defy expectations. The University of Michigan consumer confidence index jumped. The Labor Department said employers added 353,000 jobs in January, the highest monthly figure in a year. It also revised up its estimate for December job growth by more than 100,000 jobs (to 333,000), suggesting the labor market was accelerating even with unemployment near half-century lows.
Biden celebrated the news.
“The United States 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 strength in economic data will eventually reach voters, particularly once the inflation rate fell and customers became accustomed to higher price levels.
Now they speak openly that this will become a reality.
“Today’s report is another in a long line of developments that shatter expectations on behalf of American workers,” Jared Bernstein, chairman of the White House Council of Economic Advisers, said in an email Friday. “And with inflation reducing, we have wages that comfortably outpace prices, which means more purchasing power. Importantly, confidence measures, including a 13 percent increase in January according to the UMich survey, suggest that people are beginning to feel these gains reliably.”
The narrative shift is also evident in the way Biden’s critics talk about the economy. Some have resorted to examining recent data for any signs of weakness.
Alfredo Ortiz, president and CEO of Job Creators Network, a conservative advocacy group, said Friday that the jobs report “was not the home run that Democrats and the mainstream media claim.” He noted that “employment actually decreased last month in the mining, quarrying and oil and gas extraction industry. This economic sector lubricates the American economy and provides jobs to support a family.”
Former President Donald J. Trump has gone further, suggesting that the stock market’s recent big gains are the result of investors believing he will defeat Biden in November and return to office, a theory that few Wall Street economists, if any, believe. is that some, they support.
When asked on Fox Business Network on Friday why stocks were rising if the economy was going badly under Biden, Mr. Trump responded“Because they think I’m going to be elected.”
All of this should help Biden in what will likely be a rematch with Trump. But he hasn’t done it yet. A Associated Press-NORC Center for Public Affairs Research poll This week found a slight improvement in Americans’ opinion of the economy, but not in Biden’s overall approval rating.
Part of that stubbornness is structural to American politics. Supporters have become increasingly reluctant to acknowledge the economic performance of a president from an opposition party, or even to admit that the economy is doing well if the other party is in power.
But part of it, Biden’s team acknowledges, is the hangover of high inflation. Gasoline prices, for example, have fallen. But grocery prices remain elevated after a big jump in 2022 and 2023, although their pace of increase has slowed dramatically.
Fear of voter anger over high prices is why Biden is trying to force supermarket chains to lower prices. And that’s why his celebratory statement on Friday wasn’t a complete victory lap.
“I will not stop fighting to reduce costs and build an economy from the middle up and the bottom up,” the president said.
