Biden sees economic glow; GOP sees gloom
WASHINGTON >> Going into Tuesday's State of the Union address, President Joe Biden sees a nation with its future aglow.
Republicans take a far bleaker view — that the country is beset by crushing debt and that Biden is largely responsible for inflation. And the GOP now holds a House majority intent on blocking the president.
The harder reality is that the United States is on a tight rope, trying to balance efforts to reduce inflation with the need to stay upright and avoid falling into a recession. That's with the seemingly inherent contradiction of the Federal Reserve's interest rate increases and the unemployment rate falling to a near 54year low.
Based on past speeches, Biden believes the policies adopted under his watch can fill the U.S. with new factories and protect against climate change. Roads, bridges, sewer systems, ports and internet service would be improved. The middle class would be more financially secure. So would America's place in the global economy's hierarchy.
On Friday, the president said the proof was in the January employment report. It showed 517,000 jobs were added as the unemployment rate fell to 3.4%, making it “crystal clear” that his “chorus of critics” were wrong.
“Here's where we stand: the strongest job growth in history,” Biden said. “Put simply, I would argue the Biden economic plan is working.”
Republicans are pushing back. They blamed Biden's trillion-dollar plus spending for high inflation and surging gas and food prices. GOP lawmakers want to repeal his tax increases and additional money for the IRS. They oppose his forgiveness of student debt and blame him for the migrants seeking to enter the country at the U.S.-Mexican border.
Neither side captures the fullness of the actual state of the economy.
One group of experts can read the data and claim a recession is on the horizon. A different group can focus on a separate set of figures and see reason to rejoice. It's a disorienting moment.
Biden can celebrate the low jobless rate even as Republicans bemoan inflation that is still running dangerously hot.
“It's the best of times and the worst of times for the U.S. economy, to borrow a phrase,” said Mark Zandi, chief economist at Moody's Analytics. “The economy is full of contradictions as it struggles to get beyond the massive global shocks of the pandemic and the Russian invasion of Ukraine.”
Zandi said he expects the U.S. economy will “skirt” a recession this year, though many economists believe a downturn will come.
Gus Faucher, PNC Financial Services' chief economist, pegs the odds of a recession this year at 60%. But he said any downturn would be “mild” because “worker shortages will limit layoffs, consumer balance sheets are in great shape, the banking system is solid.”
“It's the best of times and the worst of times for the U.S. economy, to borrow a phrase. The economy is full of contradictions as it struggles to get beyond the massive global shocks of the pandemic and the Russian invasion of Ukraine.”
— Mark Zandi, chief economist at Moody's Analytics