Antelope Valley Press

Biden sees economy avoiding recession

By JOSH BOAK and AAMER MADHANI

WASHINGTON — President Joe Biden assured Americans, on Friday, that the US economy is chugging along in the holiday season, but the very strength of a new jobs report showed that high inflation remains a recession threat.

At the White House, the president signed an emergency bill to avert a rail strike that he said could have caused 765,000 job losses, in two weeks and plunged the country into a painful downturn. But many voters and economists still fear that a recession is nigh and the price of reducing 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 bulked up the economy. He suggested that the major recession risk was the freight rail strike, a problem the country avoided by having Congress impose an agreement that raises pay but fails to provide the additional paid sick leave that workers demanded.

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

White House officials do see reason for optimism. Gasoline prices are averaging $3.45 a gallon, down sharply from a June peak, according to AAA. The economy is expanding after shrinking in size during the first half of the year. And since July, workers’ average hourly earnings have been rising faster than consumer prices.

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

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

The Federal Reserve is attempting to reduce inflation by raising its benchmark interest rates. That action reduces economic activity in order to bring down prices.

On Wednesday, Fed Chair Jerome Powell suggested the US central bank might not have to raise rates as aggressively to return inflation to the 2% annual target. That comment caused the stock market to rise, only for the optimism to fizzle out, on Friday, as the new and revised wage data indicated the Fed might need to do more to cool the economy.

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2022-12-03T08:00:00.0000000Z

2022-12-03T08:00:00.0000000Z

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