When it comes to reassuring Americans about the economy, which is an election-year challenge for his party, President Joe Biden is telling the country to hold on.
Patience is the message, as voters swayed by lingering inflation, recession fears and the prospect of higher energy prices in the final weeks of the campaign season will determine the fate of vulnerable Democrats and control of Congress.
The $25 trillion plus economy is moving in two very different directions.
Growth has fallen for two consecutive quarters, raising the specter of recession. But job gains have continued, including an increase of 263,000 in September, in a sign of economic health. However, the latest jobs report sent stocks lower on Friday because of renewed concerns that the Federal Reserve will have to continue aggressive interest rate hikes to moderate rising consumer prices.
Biden argued that the latest numbers are solid and have slowed in recent months as inflation eases. Major oil-producing countries led by Saudi Arabia and Russia expressed “disappointment” last week with their decision to cut production, but the US government predicts that domestic output should increase by an average of 840,000 barrels next year.
Speaking at a Volvo drivetrain factory in Hagerstown, Maryland, Biden again tried to hint that more factory jobs were on the horizon.
“This is the progress we need to see,” said the president. “In the short term, a transition to more stable growth that continues to provide for workers and families, while inflation declines. In the long run, the economy was built on a stronger foundation. We still have a lot of work to do. We are building a different economy than before, better, stronger.”
However, polls show that Biden has low marks for managing the economy, and Americans generally see the country as going in the wrong direction.
In a September poll by The Associated Press-NORC Center for Public Affairs Research, only 38% of respondents approve of Biden’s economic leadership. 29% of US adults said the economy is in good shape, while 71% said the economy is doing badly. That was better than in June, when 20% said conditions were good and 79% said they were bad.
While Biden is not on the Nov. 8 ballot, Democratic candidates face relentless criticism from Republicans who want the election to be a referendum on the president’s performance. With GOP ads citing inflation and high gas prices, pressure is mounting for the White House to address public concerns about the economy before Election Day.
Jason Furman, who chaired the White House Council of Economic Advisers under President Barack Obama, said the jobs numbers were a political win for Biden, but also a warning of economic trouble ahead as the Fed comes under pressure to raise rates to combat inflation.
“The price level is still high and inflation is likely to increase each month from July to October due to gas price dynamics,” Furman said. Reducing that, he said, “will unfortunately take a long time, and potentially a lot of pain, to succeed.”
Nowhere is Biden’s messaging challenge more apparent than in gas prices.
For 99 days in a row, the White House highlighted the decline in prices after their peaks in June. But they started rising last month and have risen further since OPEC and its partners announced sharp production cuts on Wednesday.
The US national average is currently $3.91, according to AAA. That’s down from June’s 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 from the US strategic reserve to help lower prices. The White House says the administration is now considering more layoffs to offset OPEC cuts. He has also tried to shame oil companies into increasing production and reducing profit margins.
Meanwhile, the Fed expects that getting inflation closer to the central bank’s annual goal of no more than 2% — up from 8.3% a year earlier in September — will require a contraction that could put at least 1 million out of the job market. unemployed people
Fed officials said last month that the unemployment rate would rise to 4.4% next year — almost a full percentage point — if inflation fell below 3%. The hiring of Biden, who was encouraged on Friday, could soon lead to losses.
OPEC’s production cuts mean it will be even harder to bring down inflation, more expensive gas will require the Fed to take tougher measures to lower prices, and it will cost more jobs.
Investment bank Goldman Sachs suggested on Thursday that oil prices will reach $110 a barrel by the end of this year, down from a previous forecast of $100 a barrel. That would lead to higher prices at the pump and give Republicans more evidence to say it has put the economy at risk.
“The president is in denial that America is in a dangerous wage-price spiral that will drive high inflation for years, that we are in stagflation, and that we are in or on the brink of a severe recession — all created by confusing recovery,” said Rep. Kevin Brady of Texas, who wrote the House Ways and Means tax bill. Top Republicans on the committee.