The Economy is Doing Well

By Susan Bewley, As published in The Union

Marc Cuniberti is politically biased against President Joe Biden, and it skews his monetary reporting. According to the Bureau of Labor Statistics, the annual inflation rate in January, 2024, was 3.1% which is approaching the Federal Reserve’s target rate of 2.0% and is down significantly from the recent peak of 9.1% in June, 2022.

The unemployment rate in January, 2024, was 3.7%, a historically low rate. And, we are not experiencing a recession, as many economists had predicted. Indeed, according to the Commerce Department’s Bureau of Economic Analysis the Gross Domestic Product (GDP) rate of change was +3.1% (preliminary) in 2023, +2.0% in 2022 and +5.95% in 2021. Compare this with the Trump administration numbers of

-2.8% in 2020, +2.3% in 2019, + 3.0% in 2018, and +2.2% in 2017.

Controlling high inflation requires the Federal Reserve to increase interest rates to slow the economy while also attempting to not bring about high unemployment or worse, a recession. In recent years, mortgage rates have been historically very low. In 2021, the low averaged 3.0% for a 30-year fixed rate loan. With that recent history, people think that the current rate of around 7% is high.

Today’s rate is not historically very high. It happens that I bought my first house in 1972 and got a loan for 7%. When rates hit 16.6% in 1981 (largely as a result of the oil cartel) then people were not happy. But, houses were still bought and sold and then refinanced when rates came down.

It can be argued that Presidents should not be criticized or given credit for changes in inflation, unemployment and GDP on their watches. There are many outside forces like wars, pandemics, supply chain problems and foreign oil cartels’ actions which will affect the numbers. But voters do seem to assign responsibility, and Joe Biden’s numbers on the economy are very good. If memory serves, Trump fired Janet Yellen and then constantly criticized his nominated replacement, Federal Reserve Chairman Jerome Powell, a registered Republican, trying to pressure him into acting in Trump’s personal interests. By contrast, Biden does not interfere with Powell and allows him to do his job. The Fed will act as it sees fit to control inflation while maintaining high employment, regardless of the political fallout. The Fed is not in a box.

Did I forget to mention that the stock market is experiencing record highs, thereby improving the wealth of 401(k) account holders? Stop the doom and gloom, Marc.

Disclosure: This “Other Voices” is in no way a predictor of the future.