When it comes to reassuring Americans about an economy that is an election year challenge for his party, President Joe Biden is telling the country to hold on.
It is a message of patience as voters are rocked by lingering inflation, fears of a recession and the prospect of rising energy prices in the final weeks of the election campaign, when they determine the plight of vulnerable Democrats and the control of Congress.
The $25 trillion-plus economy is moving in two radically different directions.
Growth has fallen for two consecutive quarters, raising the specter of recession. But job gains continued, including 263,000 more in September, a sign of economic health. Nonetheless, the latest jobs report sent stocks tumbling on Friday on renewed fears that the Federal Reserve will need to pursue aggressive interest rate hikes to temper rising consumer prices.
Biden argued that the most recent numbers are strong and have slowed in recent months in a way that points to lower inflation. Major oil-producing nations, led by Saudi Arabia and Russia, gave it ‘disappointment’ with their decision last week to cut production, but the US government expects domestic production to increase by an average of about 840,000 barrels per day next year.
Speaking at a Volvo transmission plant in Hagerstown, Maryland, Biden tried to make the case once again that many more factory jobs were on the horizon.
“It’s the progress we need to see,” the president said. “In the short term, the transition to more stable growth that continues to benefit workers and families while reducing inflation. In the long term, the economy has been built on more solid foundations. We still have a lot of work to do. We are building a different economy than before, a better one, a stronger one.
Yet polls show Biden still getting poor marks for his handling of the economy, and people in the United States generally see the country as headed in the wrong direction.
A September poll from the Associated Press-NORC Center for Public Affairs Research found that only 38% of respondents approve of Biden’s economic leadership. Twenty-nine percent of American adults said the economy is doing well, while 71% say it is doing badly. That was better than June, when 20% said conditions were good and 79% said they were poor.
With Biden not on the Nov. 8 ballot, the Democratic candidates face relentless criticism from Republicans who want to turn the election into a referendum on the president’s performance. With GOP ads citing inflation and high gas prices, there is growing pressure for the White House to address public concerns about the economy ahead of Election Day.
Jason Furman, who led the White House Council of Economic Advisers under President Barack Obama, said the jobs numbers were a political victory for Biden but also a warning of economic trouble ahead as the Fed faces pressure to raise rates to fight inflation.
“The price level is still high and headline inflation likely increased each month from July to October due to gasoline price dynamics,” Furman said. Reducing that, he said, “unfortunately it will take a long time, and potentially a lot of pain, for them to be successful.”
Nowhere is Biden’s messaging challenge more pronounced than on gas prices.
For 99 straight days, the White House has pointed to the decline in prices after their peak in June. But they began to rise last month, and they have risen further since OPEC and its partners announced severe production cuts on Wednesday.
The US national average is now $3.91 a gallon, according to AAA. This is below the June high of $5.02, but higher than a month ago ($3.74) and a year ago ($3.27).
In late March, Biden ordered the release of one million barrels of oil a day for six months from the US strategic reserve to help bring prices down. The White House now says the administration is considering new releases to offset OPEC cuts. He also tried to shame oil companies into increasing production and squeezing profit margins.
Meanwhile, the Fed expects to bring inflation closer to the central bank’s target of no more than 2% a year – it was 8.3% higher in September than a year earlier. – will require a contraction of the labor market which could put at least a million people out of work.
Fed officials indicated last month that the unemployment rate would climb next year to 4.4% – up nearly a full percentage point – if inflation fell below 3%. Hiring Biden who cheered on Friday could soon give way to losses.
OPEC’s production cut could mean it will be even harder to bring inflation down, with more expensive gas forcing the Fed to take more drastic action to lower prices, which will cost even more money. jobs.
Investment bank Goldman Sachs hinted on Thursday that oil prices would hit $110 a barrel towards the end of this year, down from an earlier forecast of $100 a barrel. That would translate to higher prices at the pump and gave Republicans more evidence to say it puts the economy at risk.
“The President denies that America is in a dangerous wage and price spiral that will lead to high inflation for years to come, that we are in stagflation and that we are either in or on the verge of a hard recession – all of this. that he created by spoiling the recovery,” said Texas Rep. Kevin Brady, the top Republican on the House Ways and Means Committee.