Job prospects, price increases mean resentment for Biden White House as economy improves

Job prospects, price increases mean resentment for Biden White House as economy improves

Washington: High Unemployment. rising prices. Gas lines.
They are a bad memory for Americans old enough to remember the 1970s – but they can sleep a few nights in the White House, as the economic recovery from the United States’ unprecedented coronovirus recession hits some bumps .
Shocks are driving down consumer confidence, raising inflation fears, and helping Republicans make their case against President Joe Biden and his ambitious plan to reform the US economy with trillions in new spending.
High unemployment and rising prices, as shown in the 1970s, can be a powerful political force as the United States saw in April.
Republicans designed a “misery index”, one of two factors, to attack then-President Jimmy Carter. After achieving a 75% approval rating at the beginning of his presidency, the Democrats were overthrown in the 1980 landslide.
Support for Biden remains strong and US equity markets are near record highs.
The White House says that as soon as the United States emerges from an unprecedented epidemic, there are bound to be surprises.
“We should keep in mind that an economy will not recover immediately,” Cecilia Rouse, chair of the White House Council of Economic Advisors, told reporters on Friday. “It takes several weeks for people to gain complete immunity from vaccination, and even longer for those who have been left unemployed by the epidemic, to find and start a suitable job.”
Speaking to reporters at the White House, Rouse said that a mismatch between supply and demand due to the epidemic and economic snap-back had pushed inflation to higher levels, but that mismatch should prove to be temporary.
“I sincerely hope that it will recover on its own in the coming months,” she said.
The Federal Reserve is also betting that heavy inflation will cool down on its own, even as the summer takes steam, Americans begin to travel again, and the Fed maintains its major crisis levels Is / health-coronavirus / usa-safety-net / rlgpdwwjjvo / index.html. The White House will not offer a timeline for the economy to be smooth. But it does not expect to repeat the April weak jobs report, and recent data shows that applicants for unemployment benefits have fallen to a 14-month low.
“The trend line remains positive,” a senior White House official told Reuters on Wednesday. The White House also believes that the Fed can handle what comes in, he said.
“We have not seen anything that suggests that the Fed does not have enough toolkit to manage any risk it presents itself.”
Raw water ahead
Nevertheless, there is further turmoil in the coming months.
Republicans, divided by the false claims of former President Donald Trump that the 2020 election was stolen from them, seized the moment to knock the foundations of Biden’s economic plans – raising taxes on the rich and companies.
House Republican leader Kevin McCarthy, citing inflation fears and gas prices, told reporters outside the White House, “You won’t find any Republicans who are going to raise taxes. I think it’s the worst thing in this economy.” is.”
The US Chamber of Commerce, the powerful corporate lobby group, is insisting on repealing special unemployment payments that were the cornerstones of Biden’s campaign, and more than a dozen state governors have decided to return them early.
7.5 million more people are either unemployed or completely out of the job market than they were before the epidemic, even in a month or two from weak-to-expected job growth and rising prices Biden and Pressure on the Fed will increase.
“If we get another April, it’s worrying,” said Gregory Dako, chief US economist at Oxford Economics.
Some preliminary data suggest that May jobs’ report may also be weak.
If employees do not take the job for any reason – continued fear of illness, childcare shortages, and higher-than-normal unemployment benefits – it would indicate “a significant supply bottleneck,” Dako said. Then, he said, “The question is, how do you bring people back? And it’s a different question than promoting incentives in the economy.”
The Biden administration, workers, labor advocates and some economists have argued that firms should raise wages if they are having trouble hiring, and some, including McDonald’s Corp, have followed suit.
Federal Reserve officials acknowledged that things could be difficult.
“The question of how to close the labor market is going to be an important one,” said Thomas Barkin, president of the Richmond Federal Reserve, and may limit overall economic growth this year.
Unexpected hurdles
While it is a challenge to “unstick” the labor market, returning to American schools and offices and once again going on vacation is another to seal price fluctuations.
Consumer sentiment declined in early May as people were concerned with rising prices. Inflation expectations for the coming year and in the next five years reached their highest level in more than a decade.
“You have a logical challenge to shut down an economy and bring it back and we’re not built for that,” Barkin said.
Colonial pipeline closures due to gas lines in some southern states had nothing to do with the epidemic, and were lifted on Wednesday. But it may take “some time” before it becomes normal, Biden said on Thursday.
A semiconductor shortage that began before Biden took over, car prices continue to rise, as epidemic-shy Americans seek an alternative to public transportation.
Home builders point to rising wood prices, which they say threaten the important housing market and the wider economy. According to Ken Simonson, chief economist at Associated General Contractors of America, prices of materials used in construction jumped 19.7% from April 2020 to the previous month, the largest increase in the chain’s 35-year history.
The White House declined to elaborate on specific measures to be taken to help the supply side of the economy, but pointed to steps to bring fuel to the market after the closure of the colonial pipeline.
‘Now Whip Inflation’
Carter and his predecessor Republican Gerald Ford found it impossible to beat inflation, but faced more endemic problems in the 1970s.
Ford’s push to encourage Americans to save more and spend less, ‘Whip Inflation Now’ or Win, was a gross failure.
The gas lines were then the result of frozen geopolitics, not a one-time hack. Inflation was high and fed by a country-wide psyche that prices and wages should continue to rise – a key difference is that Fed officials are adamant that they will not allow a recurrence.
During the Carter years the country actually added an average of 215,000 jobs monthly. Yet unemployment was rising as a lot of new workers were joining the labor force due to demographic trends and more women working outside the home for the first time.
Biden faces a very different problem – a job market in the wake of a deadly epidemic that has forced workers to panic, panic or turn away from savings and unemployment benefits. But this does not mean that his work has become easier.

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