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5 things to know about the economy under Biden

President Biden is struggling to turn around his economic approval ratings as he heads closer to a likely rematch with former President Trump.  

Even as a record-breaking job market and lower inflation lift American confidence in the economy, Biden is getting little credit for that recovery, according to recent polling. 

A little more than a quarter of registered voters said in a New York Times/Siena College poll released Saturday that the economy is good or excellent, up 6 points from July.   

However, the portion who approve of the job that Biden is doing as president fell from 39 percent in July to 36 percent in the latest poll, conducted in February. 

“The stuff that matters most to Americans is still often unaffordable, or insofar as it’s affordable, taking up a disproportionate share of their budget and crowding out other spending,” said Lindsay Owens, executive director of Groundwork Collaborative, a progressive research nonprofit.

“So when housing is still expensive, child care is still expensive, higher education is still expensive, health care is still expensive — these are things that matter most.” 

After a dominant performance on Super Tuesday — and former United Nations Ambassador Nikki Haley’s decision to drop out of the Republican primary race Wednesday — Trump is all but guaranteed the GOP nomination, and the former president appears to have the upper hand on the economy.

Voters largely have more favorable views of the economy under Trump than under Biden, according to a CBS News/YouGov poll released on Sunday.

Nearly two-thirds said the economy under Trump was good, while about 38 percent said the same of Biden’s economy. Just more than half of voters also said they believe Biden’s policies will increase prices, while 44 percent said they believe Trump’s policies will drive prices down.

Biden is expected to deliver a forceful case for his handling of the economy during the State of the Union address Thursday and highlight recent steps to fight high prices.

Here’s how the economy is holding up under Biden as he makes his case to voters. 

Job market steams ahead despite recession fears 

The job market has repeatedly blown past expectations, month after month, despite widespread fears a little more than a year ago that the U.S. economy would fall into a recession. 

In January, the economy added 353,000 jobs, and the Labor Department made substantial upward revisions to November’s and December’s job gains.

December’s gains, which were already surprisingly strong, were revised up to 333,000 in the January report, while the number of jobs added in November was increased to 182,000.

At the same time, unemployment has remained below 4 percent, marking the longest stretch since the mid-1960s that the jobless rate has stayed under that threshold.

Many, including Treasury Secretary Janet Yellen, have since expressed confidence that the U.S. economy has achieved a so-called “soft landing,” as inflation has eased without triggering a significant economic downturn.

This marks a significant divergence from where economists thought the U.S. was headed in late 2022, when most were predicting a recession.

Inflation is still uncomfortably high

Inflation, which reached a 40-year high in 2022, has fallen significantly over the past year and a half. However, as prices remain well above pre-pandemic levels, most Americans aren’t feeling particularly positive about the cost of food and other goods.

As of January, inflation had fallen to 3.1 percent — still above the Federal Reserve’s 2 percent target but a marked improvement over the peak of 9.1 percent in June 2022, according to the Labor Department’s consumer price index.

Biden has sought to strike a careful balance on inflation, touting his administration’s achievements while also recognizing that prices are still too high for many Americans.

The president has also criticized major companies for failing to pass savings on to consumers or engaging in so-called “shrinkflation” — reducing the size or amount of a product sold to avoid outright price increases.

Owens said Biden must “use every tool in the toolkit that is available and efficient enough in the next eight, nine months to bring down costs for families, and I think he’s doing that in particular with this very important, popular and strategic junk fees initiative.”

Biden announced the formation of a “strike force” Tuesday to crack down on anti-competitive and unfair practices and lower prices in key sectors including food, prescription drugs and transportation.

Republicans and big business groups, however, accused Biden of scapegoating corporations for his handling of the economy.

Americans are getting squeezed in the housing market 

Housing costs have skyrocketed since the start of the COVID-19 pandemic, which throttled the construction of new houses and apartments needed to fill a long-running shortage.

The combination of stagnant housing supply and a rush of demand fueled by low interest rates and economic stimulus caused a massive increase in home prices and rents throughout the end of Trump’s and the beginning of Biden’s presidencies.

Apartment construction appears to have caught up enough to keep rents steady after years of double-digit percentage increases. But the Federal Reserve’s interest rate hikes have pushed mortgage rates above 7 percent without leading to lower home prices.

“America’s homeowners are sitting pretty. They’re holding a massive amount of housing wealth, despite lackluster demand from buyers, because home values skyrocketed during the pandemic and now a supply shortage is preventing those values from falling,” Redfin economics research lead Chen Zhao said in an analysis.

“Prospective buyers aren’t as lucky. The combination of elevated mortgage rates, high home prices and a limited pool of homes for sale means homeownership is about as unaffordable as ever. One bright spot for buyers is that mortgage rates should start declining before the end of 2024.” 

Manufacturing is booming 

While affordable housing investments were among the first cuts from Biden’s economic stimulus and green energy bill, the president was able to secure trillions of dollars toward green energy and infrastructure. Those programs are showing early signs of working

Private investment in manufacturing construction reached a seasonally adjusted $225 billion in new spending in January, according to federal data, rising more than 180 percent from its usual level of about $80 billion annually over the last decade.

Much of that money is being put toward facilities that make electric vehicles, batteries, semiconductors, electronics and other energy products.

“If we can continue on this trajectory, this resurgence, imagine what the state of manufacturing might look like in 2030 — at the end of the decade,” National Association of Manufacturers CEO Jay Timmons said in his annual address to member companies last month.  

“President Biden will probably take some credit for what manufacturers have achieved. That’s fair,” he said. 

Stocks are soaring  

While Biden may be loath to talk about it, the stock market is breaking record highs after slumping through a good deal of his presidency.  

The Dow Jones Industrial Average and S&P 500 Index have both set new records since the start of 2024, with the Dow breaking 35,000 points for the first time. Since the start of 2024, the Dow is up 2.5 percent, the S&P is up 7.6 percent and the Nasdaq composite is up 8.6 percent. 

Biden has focused on the unemployment rate, high wage growth and record numbers of small-business applications as his economic barometers of choice over the stock market, which Trump frequently touted as president.

Trump attempted to claim credit for the stock market recent rallying as a sign of Wall Street’s confidence in his reelection, but market experts say investors are simply anticipating lower Fed interest rates.

“Although a strong economy has changed expectations about the timing and magnitude of interest rate cuts, we still see room for the Federal Reserve to cut by three-quarters of a point this year,” Kathy Jones, chief fixed income strategist at Charles Schwab, said in a Wednesday analysis.