The economy looks bright, a potential win for Biden

A string of strong economic data appears to have finally broken consumers' sour mood about the U.S. economy, allaying fears of a recession and potentially helping President Biden in his re-election campaign.

Biden has struggled to convince voters of the positive signs in the economy under his watch, including rapid job growth, low unemployment and the fastest recovery in economic growth from the pandemic recession of any rich country .

For much of Biden's term, forecasters warned of an impending recession. Consumers remained gloomy, and voters told pollsters they were angry with the president over the other big economic development during his term: a wave of inflation that peaked in 2022, with the fastest price growth in four decades.

Much of that story appears to be changing. After sluggish price growth early in Biden's term, wages are now rising faster than inflation. The economy grew 3.1 percent from the end of 2022 to the end of 2023, exceeding expectations, including robust growth at the end of the year. The inflation rate is falling to historically normal levels. The US stock markets are at record highs.

The Federal Reserve, which raised rates sharply to curb price growth, signaled this week that it would likely start cutting rates soon. “This is a good economy,” Federal Reserve Chairman Jerome H. Powell, whose central bank is independent of the White House, said at a news conference this week.

The Conference Board's consumer confidence index has risen each of the past two months. A key part of it, in which consumers assess their current economic situation, is approaching the recent high of February 2020, on the eve of the coronavirus pandemic.

Friday also brought more evidence that the economy's performance continues to defy expectations. The University of Michigan's consumer confidence index rose. The Labor Department said employers added 353,000 jobs in January, the highest monthly number in a year. The December job growth estimate was also revised up by more than 100,000 jobs – to 333,000 – indicating that the labor market is accelerating even as unemployment remains at a near half-century low.

Mr Biden celebrated the news.

“The U.S. economy is the strongest in the world,” he said in a statement Friday morning. “Today we saw more evidence.”

White House economic aides have long expressed hope that the continued strength of economic data would eventually get through to voters, especially once inflation fell and customers became accustomed to higher price levels.

They are now openly talking about this becoming a reality.

“Today's report is yet another in a long line of expectation-raising gains for working Americans,” Jared Bernstein, the chairman of the White House Council of Economic Advisers, said in an email Friday. “And with inflation declining, wages are well above prices, which means more purchasing power. Importantly, confidence measures, including a 13 percent increase in January from the UMich survey, suggest that people are starting to reliably feel these gains.”

The narrative shift is also evident in the way Biden's critics talk about the economy. Some have resorted to scouring recent data for signs of weakness.

Alfredo Ortiz, the president and CEO of the Job Creators Network, a conservative advocacy group, said Friday that the jobs report was “not the home run that Democrats and the mainstream media claim.” He noted that “employment actually fell last month in the mining, quarrying and oil and gas extraction industries. This economic sector fuels the American economy and provides jobs to support a family.”

Former President Donald J. Trump has gone even further, suggesting that big recent stock market gains are the result of investors believing he will defeat Mr. Biden in November and return to power — a theory that few, if any, economists believe Endorsing Wall Street.

When asked on Fox Business Network on Friday why stocks rose when the economy was bad under Mr. Biden, Mr. Trump responded“Because they think I'm going to be chosen.”

All this should help Mr. Biden in what is likely to be a rematch with Mr. Trump. But that is not yet the case. A Associated Press-NORC Center for Public Affairs Research Poll this week saw a slight improvement in America's view of the economy, but not in Mr. Biden's overall approval rating.

Some of that stubbornness is structural to American politics. Partisans have become increasingly unwilling to attribute economic performance to a president from an opposing party — or even to admit that the economy does well when the other party is in power.

But part of it, Mr. Biden's team acknowledges, is the hangover from high inflation. For example, gasoline prices have fallen. But food prices remain high after a huge jump in 2022 and 2023, even as the rate of increase has slowed dramatically.

Fear of voters' anger over high prices is why Biden is trying to get supermarket chains to cut prices. And that's why his celebratory declaration on Friday wasn't a complete victory lap.

“I will not stop fighting to lower costs and build an economy from the middle and bottom up,” the president said.