Despite positive economic news, President Joseph Biden continues to face low public support. In March, the unemployment rate dropped to 3.5%. Almost 236,000 new jobs were created. But, the president has received no political benefit.
Adults in the US are ignoring the employment statistics and are generally dissatisfied with the state of the economy. There are many causes for the pessimism, according to White House staffers, including high inflation, the pandemic’s aftereffects, and the political divisiveness that makes Republicans automatically believe that the economy is bad under a Democratic president.
Future challenges for Biden could include the likelihood that unemployment will increase significantly this year.
The Federal Reserve believes that the unemployment rate will reach 4.5%. The Congressional Budget Office (5,1%) is also included. Even the budget proposal Biden just put forward assumes an increase from the present rate (4.3%). A common misunderstanding among Wall Street analysts is that the Fed controls inflation by rising interest rates, which leads to a decline in demand and an increase in unemployment.
The labour market is still running considerably hotter than the overall economy in a way that can stoke worries, despite Friday’s employment report showing that the economy is cooling as pay growth slows. In order to fight 6% inflation while keeping unemployment low, Biden is betting that traditional economic thinking is incorrect.
In a statement regarding the most recent jobs report, Biden said, “We continue to face economic problems from a position of strength.
An updated impartial economic research demonstrates why the public has not yet taken notice of the low jobless rate: The economy operates with speed bumps and frictions that make things appear worse than they are in the data because there aren’t enough workers to fill the unfilled positions. The report contends that, despite the possibility of roughly 2 million fewer people having jobs, the economy would likely run far more smoothly if unemployment were higher at 4.6%.
The labour market is “inefficiently tight,” according to economists, a situation the US likewise experienced during the Vietnam War, the Korean War, and World War II. The financial situation is just as tight as it was following World War II. According to Pascal Michaillat, an economist at Brown University, this discrepancy makes businesses and consumers alike feel as though the economy is stuck in a rut.
Because it’s difficult to find people to cover the additional time slots, “for merchants, it means running shorter hours,” he said. For families, that means spending more time looking for nannies, plumbers, or construction workers and less time enjoying themselves.
