文/Hank Tucker
Image source: Visual China
After a year in office, no matter how good other indicators are, President Biden is likely to be defeated by one economic indicator.
The Biden administration has a long list of indicators to prove that the United States is enjoying the world's strongest pandemic economic recovery: low unemployment, high wages, and a record 6.4 million jobs in 2021. Still, there's one number that could erase all the gains: 7 percent. This is the highest annual inflation rate in the United States since 1982. Republicans are making a big fuss about it, and it's already working. A year after taking office, Biden's approval ratings have fallen all the way, and consumer confidence has fallen to its lowest point in more than 10 years.
We looked at the 8 indicators that best summarize the state of the U.S. economy at the end of biden's first year in office, and here's how these indicators have performed over the past year:
I. Inflation
Draft: Forbes
Rising prices could make any gains Biden achieve economically inconsequential. The 7 percent increase in consumer prices is already wreaking havoc on Biden's proposed national infrastructure spending agenda. Democratic Senator Joe Manchin gave the plan a fatal blow by refusing to support Biden's $2 trillion domestic spending plan on inflation grounds. Biden calls rising wages a signal of economic recovery, but the rhetoric may be hard to convince families who struggle to buy food or fuel tanks even as their incomes rise.
Inflation has also allowed the Fed to consider raising rates this year after maintaining near-zero interest rates for more than a decade. Goldman Sachs expects four rate hikes this year. Last week, hedge fund billionaire Bill Ackman also joined the push for the Fed to act quickly, urging the central bank to "shock the market" with a 50 basis point rate hike, which is twice as large as expected.
II. Labour Market
Unemployment in the United States has fallen to pre-COVID-19 levels. Before Biden took office, the rate was 6.7 percent. It's now 3.9 percent. Faced with 10 million job openings, employers now face a "wave of resignations." A total of 4.5 million people in the United States resigned last November, and the monthly resignation rate rose to an all-time high of 3 percent, up from 2.3 percent at the beginning of Biden's presidency.
Dean Baker, co-founder of the Center for Economic and Policy Research, said: "People see this as bad news. I guess that's true for employers, but I'm more concerned about employees who feel empowered to quit a job they don't like and find a better job. In my opinion, this is really a great story. ”
III. Energy crisis
Crude oil prices have risen 62 percent since President Biden's inauguration day to $86 a barrel, the highest level since 2014. Gasoline prices also nearly doubled last year to $3.30 a gallon; home heating bills using natural gas are expected to be 30 percent higher than last winter.
IV. National economic growth
Real GDP growth of 5.6 percent, which is expected to be announced next week, will be the largest single-year increase since 1984. But it's important to note that the U.S. economy's high growth has slowed since the first half of 2021: Consumers and businesses have spent more on vaccines, so real GDP growth was above 6 percent in the first two quarters of last year, but slowed to 2 percent in the third quarter, as the $1.9 trillion American Rescue Plan, passed last March, did not give the economy the strong impetus democrats had hoped.
"The U.S. bailout program was a major policy mistake that still haunts us today," said Douglas Holtz-Eakin, former director of the Congressional Budget Office. "President Biden signed the bill when the economy grew by 6.5 percent, which is completely unnecessary." Holtz-Eakin, who was John McCain's chief economic adviser during his 2008 presidential campaign, gave a polite "C-" rating to Biden's performance in dealing with economic issues.
V. Stock market
In the 2020 presidential election, Biden's opponent, Republican Trump, warned that if Biden is elected, the stock market will collapse, but it turns out that this is just his rhetoric in the campaign. The S&P 500 rose 19 percent in biden's first year in office, but the president was reluctant to brag about it as much as his predecessors did — perhaps because he knew it was out of his control. In addition, he may not want to hold himself accountable for the performance of the S&P index in 2022. So far in January, the index has fallen 5%.
VI． Bond yields
Rising inflation and promises of higher interest rates have pushed bond yields to their highest levels since before the pandemic. The yield on the two-year Treasury bond broke through 1 percent this week, compared with just 0.13 percent when Biden took office; the yield on the 10-year Treasury rose 31 basis points this month to 1.83 percent. While economists expect 10-year Yields to continue to rise more than 2 percent this year, narrow spreads between short- and long-term bond yields often indicate uncertainty in the economy.
VII. Consumer Confidence
Despite the stock market boom and strong jobs, Americans are more depressed than they have been in the past decade. The University of Michigan's monthly consumer confidence survey scored 67.4 points in November 2021, the lowest level since 2011. Earlier this month, the index's latest reading was 68.8. When Biden first took office in January 2020, the reading for the index was 79.0. In his first few months in office, that reading has risen, but inflation and the seemingly never-ending pandemic have plummeted confidence.
VIII. Bankruptcy of Businesses
Hertz, JCPenney and Chesapeake Energy are all among the 7,129 U.S. companies filing for bankruptcy in 2020, the highest in 8 years as the COVID-19 outbreak upended the U.S. economy. In 2021, this pace slowed sharply as government spending and emergency loan relief programs supported small businesses. According to the American Bankruptcy Institute, only 3,724 U.S. companies filed for bankruptcy last year, the lowest level in at least 40 years. Belk and the National Rifle Association are among the businesses that went bankrupt in 2021.
Translated by Vivian School Li Yongqiang