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President Joe Biden is set to deliver his second State of the Union address on Tuesday. Outgoing National Economic Council (NEC) director Brian Deese presented reporters with a preview of how the president will address the economy and a broad array of economic issues in his speech.
The key objective when discussing the economy during his SOTU speech is conveying to the public that the “state of the economy is strong.”
According to Deese, Biden will share his administration’s progress and present it in “the broader frame” of growing the economy through “a bottom up, middle out economic strategy” rather than embracing the trickle-down economics of decades past.
One area of the economic landscape that the president will undoubtedly emphasize is the labor market.
Last week, the Bureau of Labor Statistics (BLS) reported that 517,000 new jobs were created in January, more than doubling market estimates. The U.S. recorded unemployment rate also fell to its lowest level in 53 years at 3.4 percent.
Despite the positive numbers, Deese acknowledged that the “bottom-up nature of the economic recovery is often lost or best seen in lesser understood statistics.” Therefore, he noted that Biden will champion entrepreneurship and “the historically equitable nature of this labor market recovery.”
Last month, the unemployment rates for blacks and Hispanics were 5.4 percent and 4.5, respectively. In addition, the number of self-employed workers (unincorporated) rose 1.1 percent to 9.937 million.
When asked about the polling data that suggest the American people are not feeling many of the purported gains claimed by the administration, Deese stated that Biden would explain that more work needs to be done.
“I think the core message is: We have to make more progress, but people should feel optimism that because of what we have seen and because of the progress that we’ve made, that we know how to keep making progress going forward,” he said.
Indeed, plenty of polling figures suggest that many Americans are skeptical about what the White House is reporting.
A new ABC News/Washington Post poll (pdf) revealed that 41 percent of Americans say they have become worse off financially since Biden took office more than two years ago. Sixteen percent said they have become better off, while 42 percent reported that their finances have been about the same.
But Deese pushed back against the survey, telling reporters that other key measurements of basic economic security confirm that the average household is “in a better position than they were before the pandemic hit, and that’s true for lower-income quartiles as well.”
In an interview with NBC’s “Meet the Press” on Sunday, Transportation Secretary Pete Buttigieg was asked about why voters have not embraced Biden’s accomplishments. He averred that it is because there have been too many victories, echoing the sentiment of former White House Chief of Staff Ron Klain.
“I will say that there have been so many accomplishments under this administration, it can be difficult to list them in a distilled way,” Buttigieg told host Chuck Todd, adding that “this president has exceeded expectations again and again.”
The president might have as much convincing to do, according to a new annual Gallup poll that found Americans more likely to predict negative outcomes than positive ones for five critical economic indicators, including inflation, interest rates, and unemployment.
Most U.S. adults—67 percent—say inflation will be higher. Forty-one percent think joblessness will rise in the first half of 2023, and 43 percent believe that economic growth will go down in the next six months, the poll discovered.
Rising Interest Rates
January’s strong jobs report strengthened the Federal Reserve’s resolve to raise interest rates to over 5 percent. The central bank’s campaign to reduce inflation has increased borrowing costs for people trying to buy homes and cars, putting a further financial hardship on families.
Deese recognizes that the president’s speech comes at a time when the financial pressures on family balance sheets are acute.
In response to a question from The Epoch Times about how the Fed’s rate hikes affect consumer spending, Deese said that the president’s economic plan would help ease some of these financial pressures.
“We know that we can do this. We just passed a historic piece of legislation to this effect,” he said, referring to the Inflation Reduction Act (IRA). He cited some of the benefits of the IRA, such as lower direct healthcare and energy costs for households.
During his post-Federal Open Market Committee (FOMC) press conference, Fed Chair Jerome Powell told reporters that there would be no rate cuts this year, noting that “it’s going to take some time” for disinflation to travel through the economy.
“It is our judgment that we’re not yet in a sufficiently restrictive policy stance, which is why we say that we expect ongoing hikes will be appropriate,” he said.
Since March 2022, the U.S. central bank has raised the benchmark fed funds rate by 450 basis points to a target range of 4.50 and 4.7 percent. It is estimated that the Fed’s recent quarter-point rate hike will cost credit card users another $1.6 billion in the next 12 months.
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