Go to tuesday state of Union speech, US President Joe Biden sees a nation with that it future garish.
Republicans have embraced much more gloom view – The country is besieged by crushing debt And that Biden is mainly responsible for economic inflation. And the Republican Party now has a majority in the House of Representatives on prevent the president.
the more complicated reality is that us on Tight rope, trying to balance efforts to reduce economic inflation with the need to stay upright and avoid fall into a slump. this with Seemingly inherent contradiction of interest of the Federal Reserve rate increases and unemployment rate It comes down to nearly 54year short.
based on on past Speeches, Biden believes that the policies adopted during his reign can fill the United States with new factories and protect them against Climate change. It will be roads, bridges, sewage systems, ports, and internet service improved. It will be the middle class more financially Believe. The same goes for America place in the global economy hierarchy.
The chief said the proof was in January Employment Report on Friday. It showed 517 thousand jobs added such as unemployment rate It fell to 3.4%, making it “crystalline”. clear”That” his chorus of critics” He was wrong.
“This is where we stand: the strongest job growth in history, Biden said. “Simply put, I would argue that the Biden economic plan is working.”
Republicans are paying back. Blame a trillion Biden-dollarOverspending for High inflation and high gas and food prices. Republican legislators want To cancel his tax and additional increases money for tax authority. They oppose his forgiveness of student debt And blame him for Migrants seeking to enter the country at the US-Mexico border.
no side captures fullness of actual situation of the economy.
One group of Experts can read the data and claim recession on horizon. Different groups can focus on separate set of numbers and see reason Let’s rejoice. It’s a confusing moment.
Biden could celebrate a decline in the unemployment rate rate Even as Republicans bemoan inflation, it remains a danger.
“It’s the best of times And worse of times for US economy Mark Zandi, chief economist at Moody’s Analytics, said Mark Zandi. “the economy He is full of Contradictions while striving to transcend the immense global shocks of Epidemic and Russian invasion of Ukraine. “
Zandi said he was expecting the United States economy You will “avoid” this recession yearalthough many economists believe deflation will come.
Joss Foucher, chief economist at PNC Financial Services, connects with the outlook of slack this year 60%. But he said any slowdown would be “moderate” because “worker shortages will limit layoffs, and consumer budgets will be in great shapebanking system Solid. “
Most people in The United States assumes that the nation already in Slack, even if they feel fine.
only 24% of grown ups call the national economy goodand 76% say conditions are bad, according to an Associated Press-NORC Center poll for Public affairs research. At the same time, 57% say financial the situation good. This hasn’t changed since December, but it has eroded quite a bit since then last year While 62% felt optimistic about their financial situation.
Federal Reserve critical force formation economy It aims to keep prices stable and inflation at around 2%. However, consumer prices jumped 6.5%. last year.
To bring down Inflation, the Fed tried to slow down down Employment and growth by raising its standard rate over the past year. When Biden handed over the state of Federation address in 2022, Federal Reserve standard rate It was close to zero. it’s snowing over 4.5%, the fastest increase in Four decades, Federal Reserve Chairman Jerome Powell said on Wednesday that rate likely to go higher.
“without price stability economy no work for anyone, Powell told reporters after the Fed’s last board meeting.
Fed rate Significant reversal increases in how the economy He works.
Since 2008 financial American Central Crisis bank has held its standard rate Near historic lows to achieve back growth. that made He. She easier for tech start-ups because cheap money It means that investors expected them to focus on growth instead of earnings. In addition, consumers are accustomed to historically reasonable prices for Mortgages and auto loans.
the past year’s rate The jumps resulted in a sudden injury. Inventory market He falls. prominent tech Recently such as Google and Microsoft announced Layoffs. until computer Chip companies started building new Plants and credit policies, Biden, and world economy Swing from imperfection of Semiconductors to glut. Mortgage rates initially doubled to over 7% before falling back to 6% last week. The huge increase means that monthly payments are becoming unaffordable for Potential home buyers, forcing many to stay in rentals.
Glenn Kellman, CEO of the real Said the real estate brokerage Redfin Housing market He is more Stronger than many expected. But the years of Low rates exacerbated generational inequality. Baby boomers are just as wealthy as they are homes more in Value, but then prices jumped when more Millennials wanted to buydelusion found prices themselves out.
A generation ago, baby boomers owned 21%. of US wealth, ”said Kellman. For millennials, that figure is 7%. So they still on the outside seek in. “
Carl Tannenbaum, Chief Economist for Northern Trust said it was surprised that rate increases her hit housing but not employment. traditional models It assumes that efforts to reduce inflation will automatically include job losses. But when he talks to companies, most of them hesitate fire their workers because companies have had a hard time finding skilled employees during the pandemic.
Because the show of Work was very hungry for the past Two years, holding companies on to who Tannenbaum said. “The prevailing wisdom is that if we have a recession, it will be shallow. Even companies are going in want To be ready to go.”
As much as Biden says for him mission It’s about giving Americans confidence, to him challenge may rest with a economy in Which are a few sure things.
when the epidemic hit in 2020, government The help was so overwhelming that A.J financial market crash turned into a rally. Biden tried to reassure the country in 2021 it rising Prices were a temporary inconvenience, only to find inflation to be ticking how Imagine a lot of him first Two years as president. The expectation was this interest rate eventually increases lead for layoffs and higher Unemployment, but employment remained strong, indicating that economy Unrestricted from traditional expectations.
If Biden faces a challenge in the economymay be just Be that no one knows what could happen next.
“He was in a environment Where there are many of “The uncertainty,” said Gregory Daco, chief economist at EY-Parthenon. “The mixed signals we keep getting on the economy Make it very hard To get an accurate pulse.
