2023 was a "great year" for American workers as the economy created 2.7 million jobs, said U.S. President Joe Biden in a statement on the December jobs report, arguing strong job creation continued despite inflation dropping to the pre-pandemic level of 2 percent over the last six months.
But polls show the voters, ahead of elections, are unenthused about his handling of the economy. Frustration within the White House is growing as Biden's approval ratings plunge to as low as 34 percent with about two-thirds of Americans disapproving of his performance including on inflation and jobs.
Polling averages compiled by FiveThirtyEight, showing the gap between Biden's approval and disapproval had doubled in the last 12 months, and other unacceptably low poll numbers, finding him particularly vulnerable vis-a-vis economic concerns, refute his claim that 2023 was "one more great year in the books."
The Federal Reserve Bank of New York's survey expected a 0.2 percentage point decline in short-term inflation in November to 3.4 percent, the lowest reading since April 2021; it far exceeded the Fed's 2 percent annual target. Prices fell in the month for the first time in more than three and a half years but just marginally over sinking gas prices as underlying pressures on services such as apartment rents, restaurant meals and auto insurance were stubbornly high.
While an increase in core inflation indicates interest rates will likely remain on hold for many months to follow, the Federal Reserve Bank of Cleveland's nowcast data estimates inflation measured by headline consumer price index (CPI) and core CPI to rise 0.30 percent and 0.33 percent respectively. This would represent a surge from October and November readings and mark a stunning increase of more than 17 percent since Biden took office even if it doesn't change much, which is highly unlikely as December data is expected to show headline inflation rose 0.2 percent in the month and by 3.2 percent on an annual basis.
America added 216,000 jobs in December, according to the U.S. Bureau of Labor Statistics, beating all forecasts; experts saw "a lot of noise" in the data once the agency revised down its October and November job total by a combined 71,000 jobs. These cracks further urged them to see the labor market slow "pretty substantially" unless the Fed cut the interest rate.
Payroll employment did rise, as Biden boasted, by 2.7 million in 2023 yet it dwarfed 4.8 million and 7.27 million jobs created in 2022 and 2021. The unemployment rate also remained unchanged at 3.7 percent, keeping some 6.3 million people unemployed. Per Gallup, Biden's approval slightly improved yet it was worse than the past seven U.S. presidents at this point in time.
Nominal wages increased; inflation generally eroded Americans' earnings, a trend that continued throughout the year. Average hourly earnings rose but economists warned the report "speaks to the bumpy road ahead for the Fed's journey back to 2 percent inflation." The data didn't account for the rising geographic income inequality, which according to the country's Department of Commerce, had continued to climb in recent years, skyrocketing by more than 40 percent between 1980 and 2021.
Household income is unevenly distributed across America. The U.S. Congressional Budget Office (CBO) in November described this huge disparity in its November report that projected average income before transfers and taxes of the highest quintile or one fifth of 129 million American households ($357,800) in 2020 to be 16 times the average income of the lowest fifth ($21,900).
Income after transfers and taxes reduced the great discrepancy but the gap between low- and high-income households was, notwithstanding, very significant. These revelations will stoke sentiments of many Americans who believe "inequality is rising."
Moody's is the only one of the three main rating agencies that in November maintained its highest AAA credit rating for the U.S. yet it also lowered the U.S. outlook from stable to negative, raising the risk that America's rating may be downgraded in a year or two. The potential of such a scenario cannot be ruled out as the two primary reasons for downgrading the U.S. outlook, weakening debt affordability and intensifying political polarization, won't go away anytime soon.
In 2020, the CBO predicted the U,S, gross federal debt would eclipse $34 trillion in 2029; it exceeded the forecast several years sooner just recently after topping $33 trillion in September, translating into an addition of $1 trillion roughly in the quarter. This "boiling frog" phenomenon with government bills exceeding revenue by the early 2030s and despair of not seeing an end to the poisonous polarization is posing political and economic challenges to the U.S. economy, prompting the country to create greater economic equality to prevent the downfall of capitalism against rival economic systems.
The U.S. federal agency further sees America's economic growth slowing to 1.5 percent and unemployment rising to 4.4 percent in 2024 amid calls of not ruling out another rate hike, which together will undo the U.S. sporadic progress on inflation and job and wage growth.
The successive U.S. administrations' protectionist policies, a trade war with China, and slow motion decoupling (now de-risking) indeed have added to pressure on the country's economy and shifted focus from Americans. As a result, they, a majority of whom are still living paycheck to paycheck and considering rate inflation as their top concern, believe the country's economy is in recession and rate it negatively.
*My article that first appeared at CGTN: