Surprisingly strong job growth in December is good news for President Biden, as the prospect of a long-sought “soft landing” at the start of an election year becomes more of a focus.
December's employment report was strong, with 216,000 new jobs added to the economy and the unemployment rate remaining low at 3.7%, according to the Labor Department.
December's jobs report was another positive surprise for a labor market that has defied economists' expectations throughout 2023. However, the promising state of the economy has not fixed the president's sentiments among voters.
Despite being an ample salesman, Biden's economic approval ratings are low. Only 32% of Americans gave Mr. Biden a “good” rating on the economic situation in November. gallup poll.
His overall approval rating is also low, with 39 percent of Americans giving him a passing grade. December voting. This is still a slight improvement from November's viewership of 37%.
And Biden currently has a 2 percentage point lead over his likely Republican opponent, former President Trump, according to polls from The Hill and Decision Desk.
The state of the economy is likely to be a top concern for voters, and 2024 is expected to be a year of intense economic rhetoric and debate. Here's how the first jobs report of the year sets the stage.
Airport is 'on the verge of' soft landing
December's jobs report gives policymakers confidence that the U.S. economy is on track for a “soft landing,” or rebalancing toward slow, stable growth from high inflation without a recession. The feeling is increasing.
After the federal government pumped out trillions of dollars in economic stimulus and inflation accelerated in 2021, many economists believe a recession is inevitable as the Fed begins raising interest rates in 2022 to slow the economy. I started thinking that.
However, despite many incorrect predictions, a recession did not materialize in 2023. Strong employment data since December and wage growth of 4.1% over the past year provide further evidence of a soft landing scenario.
“I think what we're seeing now is a soft landing, and my hope is that it continues,” Treasury Secretary Janet Yellen said Friday. in an interview On CNN.
“The American people did it,” she added. “Americans go to work every day, participate in the labor market, and start new businesses. But President Biden is creating incentives to give Americans the tools they need to help grow this economy. ”
Yellen's former Fed colleagues have made similar points.
“The construction of the airport is on the horizon,” Richmond Fed President Tom Barkin said in a speech Wednesday. “Everyone is talking about the possibility of a soft landing with a healthy economy and inflation returning to normal levels. And we can see the case for that.”
Optimism is also spreading among investors.
Stephen J. Rich, head of investment firm Mutual of America Capital Management, said, “Solid consumer spending amid improved employment statistics for the second consecutive year and easing inflation are encouraging consumer and investor sentiment. This is welcome news for both parties,” he said in a statement to The Hill.. “It seems very likely that the economy will have a soft landing.”
Parties vie for control of the story
Democrats were eager to hail Friday's jobs report as evidence that their policies are working as the party and Biden seek to reverse voter sentiment on the economy.
“Another strong report caps a year of sustainable job growth and economic growth from the bottom up and the middle out,” said Congressman Richard Neal (D-Mass.). It's a strategy.” said a ranking member of the House Ways and Means Committee on Friday.
“By all accounts, it’s working well.”
But Republicans continue to focus on the rising costs Americans have endured over the past two years thanks to the highest inflation in 40 years and the Federal Reserve's rapid interest rate hikes.
“Average monthly mortgage payments have increased by $1,089, making them 96% higher than they were when President Biden took office in January 2021,” the Revenue Republican Party said in a statement.
“Consumer credit debt has reached an all-time high of just over $1 trillion, and the number of Americans struggling to pay their credit card bills is skyrocketing.”
Ways and Means Committee Chairman Jason Smith (R-Missouri) said, “As the calendar turns to 2024, working families will continue to struggle with the “Bidenomics'' administration that has caused so much financial and economic strife, dissatisfaction, and anxiety. “We are witnessing the same failed policies being pursued.” .
Inflation is falling and gas prices are falling.
Americans are still grappling with high inflation, but Democrats are hoping that slowing price growth will make them a stronger sell to voters.
Inflation has fallen from an annual rise of 9% in June 2022 to 3.1% in November last year, according to the Labor Department's Consumer Price Index (CPI).
The decline in inflation comes as wage increases have largely kept pace, with average hourly wages increasing by 4.1% annually, the Labor Department said on Friday.
For the lowest-paid workers in the economy, their wage increases have actually outpaced inflation as a net benefit over the course of the pandemic.
Gasoline prices, which are some of the costs that consumers are most acutely aware of, are also on the decline.
The national average price for a gallon of gas on Friday was $3.09, a far cry from its peak of $5 when inflation was at its height.
“The average American driver now spends more than $100 less than they would have if gas prices had remained at their highest,” Biden said on the social media platform formerly known as Twitter. I advertised it in a Friday post to X.
Interest rate cuts may be delayed as the job market remains strong
Investors had been pricing in rate cuts for some time this year, hoping that inflation would return to the Fed's 2% annual forecast.
This could further boost the stock market, where the S&P 500 index of major U.S. stocks has risen nearly 600 points since the end of October and is already near record highs.
But Friday's strong jobs report likely means the Fed will hold off on cutting interest rates.
The probability that the Fed will keep interest rates in its current range of 5.25% to 5.5% at its next meeting was measured at 95% by the CME FedWatch forecast algorithm on Friday.
Stronger consumer sentiment could also be a tailwind for Biden heading into 2024, with the Michigan Consumer Sentiment Survey surging 14% in December.
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