WASHINGTON — A run of strong economic data appears to have finally punctured consumers’ sour mood about the U.S. economy, blasting away recession fears and potentially aiding President Joe Biden in his reelection campaign.
Biden has struggled to sell voters on the positive signs in the economy under his watch, including rapid job gains, low unemployment and the fastest rebound in economic growth from the pandemic recession of any wealthy country.
For much of Biden’s term, forecasters warned of imminent recession. Consumers remained glum, and voters told pollsters they were angry with the president for the other big economic development of his tenure: a surge of inflation that peaked in 2022, with the fastest rate of price growth in four decades.
Much of that narrative appears to be changing. After lagging price growth early in Biden’s term, wages are now rising faster than inflation. The economy grew 3.1% from the end of 2022 to the end of 2023, defying expectations, including robust growth at the end of the year. The inflation rate is falling toward historically normal levels. U.S. stock markets are recording record highs.
The Federal Reserve, which sharply raised interest rates to tame price growth, signaled this week that it was likely to start cutting rates soon. “This is a good economy,” Jerome Powell, the Fed chair, whose central bank is independent from the White House, declared at a news conference this week.
The Conference Board’s consumer confidence index has jumped in each of the past two months. A key component of it, in which consumers rate their current economic situations, is closing in on its recent high from 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 sentiment index jumped. The Labor Department said employers added 353,000 jobs in January, the highest monthly number in a year. It also revised its estimate of December job growth upward by more than 100,000 jobs — to 333,000 — suggesting that the job market was accelerating even with unemployment near half-century lows.
Biden celebrated the news.
“America’s economy is the strongest in the world,” he said in a statement Friday morning. “Today, we saw more proof.”
White House economic aides have long expressed hope that continued strength in economic data would eventually get through to voters, particularly once the inflation rate fell and customers grew accustomed to higher price levels.
They are now talking openly about that coming true.
“Today’s report is another in a long line of expectation-busting gains on behalf of working Americans,” Jared Bernstein, the chair of the White House Council of Economic Advisers, said in an email Friday. “And with easing inflation, we’ve got wages handily beating prices, meaning more buying power. Importantly, confidence measures, including a 13% surge in January from the UMich survey, suggest that people are reliably starting to 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 any sign 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 declined last month in the mining, quarrying, and oil and gas extraction industry. This economic sector lubricates the American economy and provides jobs to support a family on.”
Former President Donald Trump has gone further, suggesting that large recent stock market gains are a result of investors believing he will defeat Biden in November and return to office — a theory that few, if any, Wall Street economists endorse.
When asked on Fox Business Network on Friday why stocks were rising if the economy was bad under Biden, Trump replied, “Because they think I’m going to be elected.”
All of this should help Biden in what is likely to be a rematch with Trump. But it has not yet. An Associated Press-NORC Center for Public Affairs Research poll this week found a slight improvement in Americans’ views of the economy, but not in Biden’s overall approval rating.
Some of that stubbornness is structural to American politics. Partisans have grown increasingly unwilling to credit a president from an opposing party with economic performance — or even to concede the economy is doing well if the other party is in power.
But some of it, Biden’s team acknowledges, is the hangover of high inflation. Gasoline prices have fallen, for example. But grocery prices remain elevated after a huge leap in 2022 and 2023, though their rate of increase has drastically slowed.
Fear of voter anger over high prices is why Biden is trying to jawbone grocery chains into lowering prices. And it is why his celebratory statement Friday was not a full-on victory lap.
“I won’t stop fighting to lower costs and build an economy from the middle out and bottom up,” the president said.
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