Biden sees economy avoiding recession, but risks remain

Date:

WASHINGTON (AP) — President Joe Biden assured Americans Friday that the US economy is slumping over the holiday season, but the power of a new jobs report showed that high inflation remains a threat of recession.

At the White House, the president signed an emergency bill to prevent a railroad strike that he said would have lost 765,000 jobs in two weeks and plunged the country into a painful downturn. But many voters and economists still fear that a recession is near and the price of cutting high prices will be layoffs.

Biden pointed to the addition of 263,000 jobs in November – with the unemployment rate holding steady at 3.7% – as proof that his policies have helped the economy grow. He suggested the biggest recession risk was the rail freight strike, a problem the country avoided by having Congress impose an agreement that raises wages but does not provide the extra paid sick leave workers demanded.

“Things are going — they’re moving in the right direction,” Biden said. “As we enter the holiday season, here’s what all this means: Americans are working, the economy is growing.”

White House officials see reason for optimism. Gas prices average $3.45 per gallon, a sharp drop from a peak in June, according to the AAA. The economy is growing after a contraction in the first half of the year. And since July, average hourly wages for workers have risen faster than consumer prices.

But inflation can be a game of whack, and Friday’s employment report suggested that wage growth may actually be part of the problem.

Inflation has been a moving target during Biden’s presidency. Supply chain challenges and shortages drove up prices as the country began to recover from the 2021 pandemic. Higher oil and food costs drove up inflation after Russia invaded Ukraine in February. And the jobs report showed that wage growth was accelerating sharply, which could fuel inflation going forward.

The Federal Reserve is trying to reduce inflation by raising interest rates. That action reduces economic activity to lower prices.

Fed Chairman Jerome Powell suggested on Wednesday that the U.S. central bank need not raise rates so aggressively to bring inflation back to its annual target of 2%. That comment lifted the stock market, before optimism faded on Friday as new and revised wage data indicated the Fed may need to do more to cool the economy.

“With these revisions, the rate of wage growth is more consistent with 5% inflation than 2% inflation,” said Harvard University professor Jason Furman, former top economist in the Obama White House. “In that sense, more labor market adjustment than previously hoped may be needed to bring inflation down.”

The president’s main message is that his policies have helped prevent disasters, such as a recession caused by a railroad strike. The bill he signed on Friday binds railroad companies and workers to a proposed settlement reached in September between the railroads and union leaders but rejected by some union workers.

“The bill I am about to sign will end a difficult railroad dispute and help our country avoid what no doubt would have been an economic catastrophe at a very bad time on the calendar,” Biden said. He said his team helped negotiate a “good product, but I think we have more work to do”.

Members of four of the 12 unions involved had rejected the proposed contract because of insufficient paid sick leave, raising the possibility of a strike from December 9. Biden acknowledged the shortcoming and said he would continue to push for that benefit for every American worker. .

“I have long supported paid sick leave,” said the president, a staunch supporter of the union. “I’m going to continue that fight until we succeed.”

He said Republican lawmakers blocked the inclusion of seven days of paid sick leave in the agreement, and it’s unclear how he would garner support for expanding family leave to all employees as the GOP won the House majority in the election. November.

Republican leaders have tapped deep doubts about the US economy, with party officials noting that higher prices have caused the US savings rate to hit a 17-year low. According to AP VoteCast, about three-quarters of voters last month called economic conditions “bad” or “not so good.”

Texas Rep. Kevin Brady, the leading Republican on the House Ways and Means Committee, called the jobs report a “pre-Christmas nightmare.”

“The White House has absolutely no idea of ​​the very real labor shortage that continues to hurt Main Street businesses and drive up prices,” Brady said. “And for many workers, they’re grappling with real wage losses and real pay cuts, making sticker shock a big part of the shopping experience for this year’s holiday season.”

While Biden has said the economy is moving in the right direction, the employment report indicates it is on a “more confused path” in which it is unclear whether a downturn and eventual job losses can be avoided, said Daniel Zhao, chief economist at Glassdoor, a vacancy website.

The mixed signals come partly because the employment report comes from two surveys. The survey of employers’ payrolls shows how many jobs have been added, while a separate survey of households determines the unemployment rate.

The two surveys diverge, indicating that the economy has actually lost jobs over the past two months, contradicting the gains seen in the survey of establishments.

Zhao said the economy doesn’t look like it’s going into recession, but there’s a risk that when the jobs numbers are revised next year, policymakers could learn in hindsight that the US is cutting jobs while the Fed continues to raise rates.

“These surveys are out of sync at a critical turning point in the economy,” he said.

The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Share post:

Popular

More like this
Related