SUPERIOR (Wisconsin): US President Joe Biden and his Treasury chief touted the country’s robust 2023 economic performance on Thursday (Jan 25), with stronger=than-expected growth offering a boost as the Democratic incumbent revs up his re-election campaign.
“Experts, from the time I got elected, were insisting that the recession was just around the corner,“ Biden said in a speech in Wisconsin. “Well, you know, we’ve got really strong growth.”
He was referring to data released earlier Thursday that showed the US economy – fuelled by a resilient job market and consumer spending – grew at an annualised rate of 3.3% in the October-December period.
From the same period a year prior, gross domestic product rose 3.1% in the fourth quarter.
Meanwhile, full-year economic growth accelerated to 2.5%, from 1.9% in 2022.
Biden contrasted the figures with recent remarks by former president Donald Trump, who said he was hoping for the world’s biggest economy to crash.
“We obviously have more work to do, but we’re making real progress building an economy from the middle out and the bottom up, and not the top down,” said Biden.
The Dow Jones Industrial Average and S&P 500 closed at new record highs after the GDP report.
In a statement on Thursday, Biden said: “Wages, wealth, and employment are higher now than they were before the pandemic.”
As Biden’s re-election drive revs up, his team is seeking to show that he has done more for the country than Trump.
In Chicago, Treasury Secretary Janet Yellen emphasised the economy’s gains under the Biden administration, including investments from the Bipartisan Infrastructure Law and Inflation Reduction Act.
“None of these policies are aiming to recreate an earlier era. This country and the world have changed and we cannot go back,” Yellen told the Economic Club of Chicago, in an apparent rebuke of Trump’s policies.
The Biden administration, she argued, is building the foundations of America’s future through upgraded infrastructure, a modern tax system and centered on the middle class.
The latest GDP data strengthens optimism that America is achieving a “soft landing”, where inflation cools on higher interest rates, without triggering a recession.
The fourth quarter jump in growth “reflected increases in consumer spending, exports, state and local government spending” and other areas, said the Commerce Department.
In early 2023, analysts expected consumption to lose steam as households drew down on accumulated savings during the Covid-19 pandemic and as borrowing costs remained high.
But the country avoided a recession last year.
“Economic growth has been more resilient than we anticipated,” Nationwide chief economist Kathy Bostjancic told AFP.
A robust labour market fuelled job and wage gains, she said. Bolstered personal incomes in turn helped to support consumption.
“We still expect the economy to grow in 2024, but at a slower pace,” Bernard Yaros of Oxford Economics said.
“As long as the labour market holds it together and unemployment drifts only gradually higher, the consumer will continue to power this expansion,“ he added.
Residential investment will also likely be a bigger factor behind growth, with the Federal Reserve expected to lower interest rates and homebuilders set to capitalise on lower mortgage rates and a frozen existing-home market, Yaros said.
The outlook for first quarter GDP figures now is for “moderate slowing” from the fourth quarter, said Ian Shepherdson of Pantheon Macroeconomics.
Analysts expect the Fed may cut interest rates as soon as in May or June, depending on inflation.
Navy Federal Credit Union corporate economist Robert Frick said current data “clears the way for the Fed to deliver the three rate cuts projected for this year, at least”. – AFP
