US President Biden still faces the threat of a recession. He has no assurance Republicans will refrain from forcing the US Treasury to default on the debt sometime in the next two years. For now, however, he can take comfort in a recent batch of good economic news.
Most important was the dog that didn’t bark. Or more precisely, the railroad strike that won’t happen. In a painful but responsible separation from organised labour, the White House ushered a bipartisan deal through Congress to impose the final labour agreement between railroad companies and unions, thereby heading off a crippling work stoppage this month.
Though Republicans rejected a proposal to increase the number of sick days for railway employees from one day to seven, the Senate, by a vote of 80-15, ended fears of a strike that could have thrown hundreds of thousands of people out of work and brought the holiday shopping season to a screeching halt.
Among Democrats, only Sen. Joe Manchin III of West Virginia voted against including sick days in the labour agreement; all but six Republicans opposed the legislation.
Biden praised the deal’s passage. “Congress’ decisive action ensures that we will avoid the impending, devastating economic consequences for workers, families, and communities across the country,” he said.
That news came shortly after the Bureau of Economic Analysis reported that personal consumption expenditures increased by 0.8 per cent. Meanwhile, third-quarter growth came in higher than expected at 2.9 per cent. If we are looking for steady, sustainable growth, this number fits the bill.
And despite those growth figures, inflation abated somewhat. The Wall Street Journal reported: “The personal-consumption expenditures price index rose 6% in October compared with the same month a year ago, marking an easing from 6.3% in September.” Stripping out volatile food and energy costs, core inflation rose 5 per cent in October compared with a year ago.
This helps explain why Federal Reserve Chair Jerome H. Powell said, “It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down. The time for moderating the pace of rate increases may come as soon as the December meeting.”
Holiday shopping
To top it off, gas prices continued to plunge, largely because of a decrease in worldwide demand. The average gallon price is now less than it was at the onset of the war in Ukraine. That too will help keep money in consumers’ pockets, just as they set out for their holiday shopping.
Biden released a statement of restrained optimism: “We are seeing initial signs that we are making progress in tackling inflation, even as we make the transition to more steady, stable economic growth.”
He added, “It will take time to bring inflation back to normal — and there could be setbacks along the way — but the American people should have confidence that our plan to tackle inflation, without giving up all the historic economic gains American workers have achieved, is working.”
Finally, last week ended with a positive jobs report for November. The economy added 263,000 jobs, keeping the unemployment rate at 3.7 per cent. Despite layoffs in the tech industry, job growth remained remarkably sturdy, and wages rose by 0.6 per cent.
The White House’s approach of cautious positivity is wise. The mantra of underpromising and overperforming has worked for Biden before. The majority of outside economists and business leaders have expressed certainty that a recession is just around the corner.
Hasn’t a recession followed virtually every effort to tamp down inflation by raising interest rates? Yes, but it’s also possible the economy is on a flight path to a soft landing and a return to normal inflation and economic growth.
Though economic fortunes can still take a turn for the worst, Biden’s economic performance certainly looks likely to produce solid results in vivid contrast to the rest of the world. Biden, quite simply, could not have asked for a better run of economic news on which to end the year.
Washington Post
Jennifer Rubin is a prominent American political columnist and author
