5 things to know about the economy under Biden

President Biden is struggling to turn around his economic approval ratings as he approaches a possible rematch with former President Trump.

Recent polls show Mr. Biden has received little credit for his economic recovery, even though a record job market and falling inflation have boosted confidence in the U.S. economy.

A New York Times/Siena College poll released Saturday found that just over a quarter of registered voters said the economy was in good or good shape, up 6 points from July.

However, the share approving of Biden’s job as president has fallen from 39% in July to 36% in the latest poll conducted in February.

“The things that matter most to Americans are often still out of reach or affordable, taking up a disproportionate share of their budgets and crowding out other spending,” says the progressive research nonprofit. said Lindsey Owens, executive director of the organization Groundwork Collaborative.

“So these are the most important things at a time when housing is still expensive, child care is still expensive, higher education is still expensive, health care is still expensive.”

Trump’s dominant performance on Super Tuesday and former United Nations Ambassador Nikki Haley’s decision to withdraw from Wednesday’s Republican primary have all but ensured that Trump will win the Republican nomination, and he is ahead of Trump on the economic front. The president appears to have the upper hand.

Voters generally have a more favorable view of the economy under the Trump administration than under the Biden administration, according to a CBS News/YouGov poll released Sunday.

Nearly two-thirds said the economy is doing well under the Trump administration, and about 38% said the same thing about the economy under the Biden administration. Just over half of voters said they believed Biden’s policies would raise prices, while 44% said they believed Trump’s policies would push prices down.

Biden is expected to make a strong case for addressing the economy in Thursday’s State of the Union address, highlighting recent steps to combat high prices.

Here’s how the economy is holding up as Mr. Biden makes his case to voters.

Job market moves forward despite recession fears

Despite widespread fears a little more than a year ago that the U.S. economy was heading into recession, the job market has repeatedly outperformed expectations month after month.

The economy grew by 353,000 people in January, and the Labor Department significantly revised upward its employment growth estimates for November and December.

December’s growth, which was already surprisingly strong, was revised upward to 333,000 in January’s report, and November’s job growth rose to 182,000.

At the same time, the unemployment rate remains below 4%, the longest period of time below that threshold since the mid-1960s.

Since then, many, including Treasury Secretary Janet Yellen, have expressed confidence that the U.S. economy has achieved a so-called “soft landing,” as inflation has eased without causing a significant economic downturn.

This marks a significant departure from where economists thought the U.S. would be heading in late 2022, when most predicted a recession.

Inflation remains uncomfortably high

Inflation was set to reach its highest level in 40 years in 2022, but has fallen significantly over the past year and a half. But prices remain well above pre-pandemic levels, and most Americans don’t feel particularly positive about the prices of groceries and other goods.

According to the Labor Department’s Consumer Price Index (CPI), inflation had fallen to 3.1% as of January, still above the Federal Reserve’s 2% target, but by June 2022. This is a marked improvement from the peak of 9.1%.

Mr. Biden has sought to tout his administration’s accomplishments and strike a careful balance on inflation, while also acknowledging that prices remain too high for many Americans.

The president has also criticized major companies for failing to pass on savings to consumers and for engaging in so-called “shrinkflation” (reducing the size or quantity of products to avoid sudden price increases).

Owen said Biden “must use every tool in his available and fully efficient toolkit over the next eight to nine months to reduce costs for families, especially… “I think we’re doing that with this very important, popular and strategic junk fee initiative.” ”

Biden on Tuesday announced the formation of a “strike force” to crack down on anti-competitive and unfair practices and lower prices in key sectors such as food, prescription drugs and transportation.

But Republicans and major business groups accused Biden of scapegoating corporations over his economic policies.

Americans are squeezed in the housing market

Housing costs have soared since the start of the COVID-19 pandemic, slowing the construction of new homes and apartments needed to fill a long-term housing shortage.

A combination of stagnant housing supply, low interest rates and last-minute demand from stimulus checks led to large increases in home prices and rents between the end of the Trump administration and the beginning of the Biden presidency.

Apartment construction appears to be catching up enough to keep rents stable after years of rising at double-digit rates. However, the Federal Reserve’s interest rate hikes did not cause housing prices to fall, and mortgage interest rates rose above 7%.

“America’s homeowners are sitting pretty. Even though demand from buyers is weak as home values ​​soared during the pandemic and now a lack of supply is preventing home values ​​from falling.” They hold huge amounts of housing equity,” Redfin economic research director Chen Zhao said in an analysis.

“Prospective buyers are not so lucky. A combination of rising mortgage rates, soaring home prices, and a limited pool of available homes for sale are making homeownership as unaffordable as ever. One bright spot for buyers is that mortgage rates will start to fall by the end of 2024.”

Manufacturing is booming

The first cuts from Biden’s stimulus and green energy bill included affordable housing investments, but the president was unable to set aside trillions of dollars for green energy and infrastructure. Ta. These programs are showing early signs of working.

Private investment in manufacturing construction reached a seasonally adjusted $225 billion in new spending in January, 180% from normal levels (about $80 billion annually over the past decade), according to federal data. This has increased by more than 20%.

Much of that money is going to facilities that make electric vehicles, batteries, semiconductors, electronics and other energy products.

“If we can continue on this trajectory, this resurgence, we will be well on our way by the end of the decade, by 2030,” Jay Timmons, CEO of the National Association of Manufacturers, said in his annual address to member companies last month. “Imagine the situation in the manufacturing industry.”

“President Biden will probably give some credit to what manufacturers have accomplished. That’s fair,” he said.

stocks are soaring

Biden may be loathe to talk about it, but the stock market is at record highs after being in the doldrums for much of his presidency.

The Dow Jones Industrial Average and S&P 500 both set new records since early 2024, with the Dow surpassing 35,000 points for the first time. So far in 2024, the Dow Jones Industrial Average is up 2.5%, the S&P is up 7.6%, and the Nasdaq Composite Index is up 8.6%.

Mr. Biden has focused on the unemployment rate, high wage growth and record small business filings as economic barometers, rather than the stock market, which Mr. Trump has frequently touted as president.

President Trump has tried to claim that the stock market’s rise is a sign of Wall Street’s confidence in his re-election, but market experts say investors are simply hoping for lower Fed rates. do.

“The strong economy has changed expectations about the timing and size of rate cuts, but the Federal Reserve still has room to cut rates by three-quarters of a percentage point this year,” said Kathy Jones, chief fixed income strategist at Charles Schwab. It appears that this is still the case.” , in Wednesday analysis.