With less than a year until the pivotal 2024 election, President Biden and the Democratic Party are stuck in economic purgatory.
The U.S. economy is slowing after years of rapid expansion following the pandemic, and inflation is losing momentum on its way down. But slow progress toward economic smoothing has done little for Mr. Biden and his party politically.
Biden’s approval ratings have fallen to record lows as Americans feel the pinch of high interest rates and plateauing inflation.
Higher employment and lower wage growth may help fight inflation, but it also leaves the administration with a way to convince Americans about its response to the economy.
Julia Pollack, chief economist at ZipRecruiter, said the slowing job market “partly explains why job seekers and new employees are feeling more stressed than they have been in over a year.”
“Increasing financial burdens and lower worker leverage are hitting hard. Last month’s decline in real disposable income means that consumer spending could cool further in coming months, putting further downward pressure on the labor market. It suggests sex.”
Employment rose to record levels, but approvals were at record lows.
Biden and Democrats have struggled to translate record-breaking job growth into positive public opinion about the economy.
Since Biden took office in January 2021, the U.S. has added about 14 million jobs, far more than any of his predecessors. Those millions of jobs are just the product of an economic recovery that had already begun before Biden’s election, but the president remains making the speed of the recovery a centerpiece of his re-election campaign.
“Today’s report shows that Bidennomics is growing the economy from the middle out and the bottom up, not the top down,” the White House said in a statement Friday.
Biden and Democrats want to praise the resilience of the U.S. labor market. many economists It is predicted that he will lose his job by now.
Although 150,000 jobs were added last month and the unemployment rate was 3.9 percent, experts say the U.S. is still adding more than enough jobs to protect the economy from recession.
“Given demographic changes, the economy needs to add only 75,000 jobs per month to stabilize employment, compared to 200,000 a decade ago,” the audit said. Joseph Brusuelas, chief U.S. economist at tax firm RSM, said in an analysis Friday.
He added that October’s jobs report was “consistent with full employment” and “something to be celebrated”, especially after years of high inflation.
However, Biden’s support is not so strong.
One poll found that only 37% of Americans approve of the job Biden is doing as president. gallup poll The announcement last week coincided with the lowest point of his presidency. Biden’s approval rating among Democrats also fell 11 points to an all-time low of 75%.
The president’s approval rating among independents fell by 4 points to 35%, while Biden’s approval rating among Republicans fell to just 5%.
Recent polls on Biden’s handling of the economy and consumer sentiment have also fallen sharply, largely in line with increases in interest rates and credit card balances.
Inflation and interest rate hikes remain at high levels
Mr. Biden and Democratic leaders primarily blame the media and the Republican Party for fostering Americans’ gloomy view of the economy.
In a statement last month following September’s impressive job gains, Biden criticized reporters who were “not the happiest people in the world” for being too fixated on concerns about inflation and recession. did.
“I think people who have jobs feel better about the economy,” Biden said in October.
Millions of Americans who lost their jobs during the recession have regained jobs under the Biden administration, much faster than many economists expected. There was also intense demand for workers, and tens of millions of Americans were able to secure new jobs with higher wages and better pay, flexibility, and career opportunities.
Callie Cox, U.S. investment analyst at eToro, also cited the record number of strikes as a sign of “the power that workers have at this moment.”
After going on strike since September 14, the United Auto Workers (UAW) this week reached tentative agreements with Ford, General Motors (GM) and Stellantis on new contracts that would raise workers’ wages by 25%.
The UAW also regained key concessions it had given up after the Great Recession, including cost-of-living adjustments and faster increases to the top wage.
“We are in the midst of a long-standing empowerment movement in the job market,” Cox said. “While this may not be reflected in the economic indicators, it shows how strong the economy is. This is another reminder,” he wrote.
But while the job market has slowed compared to its pre-pandemic strength, Americans are still struggling with both inflation and interest rates at their highest levels in decades.
According to the Consumer Price Index (CPI), the annual inflation rate peaked at 9.1% in June 2022 and reached 3.7% in September.
Nick Bunker, director of economic research at Indeed, said the slowdown in the job market may be hitting hardest on Americans who can’t stand setbacks.
“The increase in the unemployment rate is concentrated among workers who have recently lost their jobs, and the employment rate of the unemployed is decreasing,” Bunker explained.
“Perhaps this rise is just a sign that the unusually tight labor market of recent years is easing. But it would be troubling if the upward momentum continued.”
“The Fed holds the key.”
Soaring inflation has pushed the Fed into its fastest interest rate tightening cycle in history, pushing borrowing costs to their highest levels since the 2007-2008 recession.
At Wednesday’s meeting, the Federal Reserve held off on raising interest rates for the second time in a row, citing the burden on businesses and consumers from rising interest rates. Experts doubt the bank will raise borrowing costs again after the weak October jobs report.
“The good news is that this economic slowdown is not due to economic fundamentals, but to prudent adjustments by the Fed. If the Fed and bond markets prove to be overreaching, the Fed holds the key to turning things around. Hold on,” Pollack said.
Pollack said businesses “have a lot of vacancies, they want to hire, they want to expand. But high interest rates are holding them back. If interest rates start coming down next year, they’re going to have a lot of vacancies, they want to hire, they want to expand. It is hoped that pent-up demand for many inputs will be released again.”
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