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’s a message of patience as voters are hit by lingering inflation, fears of a recession and the prospect of rising energy prices in the final weeks of the campaign season when they will decide the fate of of vulnerable Democrats and control of Congress.
The more than $25 trillion economy is spinning in two radically different directions.
Growth has fallen for two straight quarters, raising the specter of recession. But job gains advanced, including 263,000 more in September in a sign of economic health. However, the latest jobs report sent stocks tumbling on Friday on renewed concerns that the Federal Reserve will have to continue aggressively raising interest rates to temper rising consumer prices.
Biden argued that the most recent numbers are solid and have slowed in recent months in a way that indicates a decrease in inflation. Major oil-producing countries led by Saudi Arabia and Russia have dealt them a “disappointment” with their decision last week to cut production, but the US government expects domestic output to rise by an average of about 840,000 barrels a day next year.
Speaking at a Volvo transmission factory in Hagerstown, Maryland, Biden tried to make the case once again that many more factory jobs were on the horizon.
“This is the progress we need to see,” the president said. “In the short term, the transition to more stable growth that continues to provide for workers and families while reducing inflation. In the long term, the economy has built on a firmer base. We still have a lot of work to do do. We are building a different economy than before, a better one, a stronger one.”
Still, polls show Biden consistently 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 by The Associated Press-NORC Center for Public Affairs Research found only 38% of those surveyed approved of Biden’s economic leadership. 29 percent of American adults said the economy is in good shape, while 71 percent said it is doing badly. That’s better than in June, when 20% said conditions were good and 79% said they were bad.
While Biden is not on the ballot on November 8, the Democratic candidates are facing relentless criticism from Republicans who want to make the election 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 before 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 to come when the Fed it faces pressure to raise rates to deal with inflation.
“The price level is still high and headline inflation is likely to pick up every month from July to October due to gas price dynamics,” Furman said. Reducing this, he said, “unfortunately, it takes a lot of time, and potentially a lot of pain, to be successful.”
Nowhere is Biden’s messaging challenge more pronounced than on gas prices.
For 99 consecutive days, the White House highlighted falling prices after their peak in June. But they started ticking up last month, and have shot up more 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 1 million barrels of oil a day for six months from the US strategic reserve to help lower prices. The White House now says the administration is weighing more releases to offset the OPEC cuts. He also tried to shame oil companies into increasing production and cutting their profit margins.
Meanwhile, the Fed expects that the approach of inflation to the target of the central bank of no more than 2% a year – it was 8.3% higher in September a year earlier – will require a contraction in the market of work that could put at least a million. people out of work.
Fed officials indicated last month that the unemployment rate would rise next year to 4.4% — nearly a full percentage point — if inflation fell below 3%. Biden’s hiring that he applauded on Friday could soon lead to losses.
OPEC’s production cuts could mean it will be even harder to bring down inflation, with more expensive gas requiring the Fed to take more drastic measures to lower prices, costing even more jobs.
Investment bank Goldman Sachs suggested on Thursday that oil prices will reach $110 a barrel by the end of this year, compared to its previous forecast of $100 a barrel. That translates into higher prices at the pump and has given Republicans more evidence to say it has put the economy at risk.
“The president is in denial that America is experiencing a dangerous wage-price spiral that will cause high inflation for years, that we are in stagflation, and that we are in, or on the verge of, a severe recession – everything he created by bungling the recovery,” said the Texas Rep. Kevin Brady, the top Republican on the House Ways and Means Committee on tax writing.