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WASHINGTON — The recession many economists predicted did not occur.
Consumer confidence is soaring.
The stock market soared to an all-time high.
And on Friday, strong jobs numbers were released, with the Labor Department saying the U.S. economy added 353,000 jobs in January, nearly twice as many as expected.
President Joe Biden is seeking to convince Americans that the economy is improving amid stubborn inflation as he seeks re-election this fall in what is likely to be a rematch with Republican front-runner Donald Trump. For many years it was considered one of the biggest debts.
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But repeated positive news on the economy, led by Friday’s blockbuster jobs report, suggests the tide could turn and the economy could become a strength for Biden by the November election.
“The economy is about as good as it gets,” said Mark Zandi, chief economist at Moody’s Analytics, adding that even the only downside, “still painful” inflation, is starting to hurt. “I think he’s going to become more assertive as each month goes on,” Zandi said of Biden. “People’s perceptions will become more in line with his message.”
The economy has long been a weakness for Biden, with polls showing Americans disapprove of his handling of the issue. Part of the reason is that the post-pandemic recovery has been markedly uneven.
Wealthier households have benefited more from economic improvements. Meanwhile, middle-class and low-income Americans are bearing the brunt of the pain from soaring prices for food and other goods. The combination of high student loan burdens and soaring housing prices is increasing financial insecurity for many households.
Former Trump official: Report is a job ‘explosion’
But January’s job gains beat economists’ expectations, which had predicted 185,000 jobs added last month. The unemployment rate remained stable at a low 3.7%, marking the 24th consecutive month that the unemployment rate has been below 4%, the longest period since the 1960s. Since Biden took office, the U.S. economy has now added 14.8 million jobs, 5.4 million more than before the coronavirus pandemic.
“America’s economy is the strongest in the world, and today we saw further proof,” Biden said in a statement.
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Even former Trump administration National Economic Council Chairman Larry Kudlow called the latest jobs report an “explosive” jobs report, even as Republicans continue to criticize Biden over the economy. .
“I know a lot of my conservative friends are trying to poke holes in this report,” Kudlow said on Fox News. “But you know what? That’s a fact. This is a very powerful report. All economic statistics should not be viewed through a political lens.”
The United States’ gross domestic product (the value of all goods and services produced in the United States) expanded by 2.5% last year, faster than any other developed country in the world last year, according to an International Monetary Fund analysis released this week. The US economy is expected to grow faster than any other country again this year.
Meanwhile, the stock market has been steadily rising in recent months, with the Dow Jones Industrial Average above $38,000 for the first time in history. The momentum is so strong that Trump, who had predicted a market collapse if Biden won the 2020 election, now wants credit for himself, and this week, the stock market’s rally is due to investors predicting a fall Trump He told supporters that this was a predicted victory.
White House press secretary Andrew Bates responded by saying, “We recognize that President Biden is delivering an economy that actually benefits hardworking families, not just billionaires and multinational executives. “We welcome a wide range of ideologically diverse voices,” he said, mocking President Trump.
Consumers are increasingly confident that inflation will ease
The trend of improving economic conditions is not entirely new.
Over the past year, the White House has dubbed Biden’s economic policies “Bidenomics” and praised the strong job market and economic growth. But Biden has been unable to ease economic fears for one main reason: high inflation.
Although inflation has slowed significantly since reaching a 40-year high of 9.1% in June 2022, it continues to trend downward. Consumer prices in December were 3.4% year-on-year, up slightly from 3.1% in November. Costs for services such as rent, car repairs, and auto insurance are rising.
But there are new signs that Americans are becoming less concerned about inflation.
Consumer sentiment rose 29% in the past two months, the largest two-month increase since 1991, according to a frequently cited University of Michigan consumer survey. This is primarily a result of inflation and an improving outlook for personal finances. Consumer confidence is now 60% above the all-time low measured in June 2022 and the highest level since July 2021.
“It’s rare to see such agreement across the population and across so many aspects of the economy,” said Joan Hsu, director of consumer index research at the University of Michigan. He said consumers are holding off on making judgments in the fall about whether inflation will continue to slow. “After months of slowing inflation, I think consumers are finally starting to feel safe. They’re ready to take a breather.”
Moody’s Analytics predicts Biden victory based on economy
A Quinnipiac University poll this week showed Mr. Biden leading Mr. Trump 50% to 44% among registered voters overall, widening his 1-point lead in the same poll in December. Importantly, Biden was found to have a 52% to 40% lead among independent voters, who will play a key role in deciding the 2024 election.
A majority of voters, 55%, said they disapproved of Biden’s economic policies, while 42% said they did. Still, it’s a slight improvement from a December Quinnipiac poll in which just 39% approved of Biden’s economic response.
“Things are finally starting to calm down,” Biden said during a stop in Superior, Wisconsin, last week, reflecting on the rise in consumer confidence. “We passed a lot of very good legislation. We knew it would take a while for it to start taking hold. But now it’s taking hold and turning the economy around.”
Consumer sentiment remains 7% below its historical average, according to a University of Michigan survey, suggesting many Americans want to see sustained improvement in the economy before concerns ease.
And with the exception of the Quinnipiac poll, Mr. Biden still trails Mr. Trump in the majority of head-to-head polls and several key battleground states.
Despite this, Moody’s Analytics predicted a narrow victory for Biden over Trump in its presidential election model released Thursday. The forecast is based on political factors as well as the country’s economic conditions, including historically important election indicators such as gas prices, household income, mortgage rates and consumer confidence.
“Biden has an advantage because he has the economy behind him,” Zandi said. “There are economic tailwinds in his re-election bid. If everything goes according to our plan, the tailwinds will get even stronger as the election approaches. The economy will continue to do well. .And I think by Election Day, that’s going to resonate more healthily with people’ voters. ”
Contact Joey Garrison at X (formerly Twitter, @joeygarrison).
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