Although jobs numbers have increased, inflation has many thinking pessimistically about the current economy.
Inflation remains a thorn in the side of many Americans, three years after the coronavirus pandemic wreaked havoc on people’s health as well as the world’s economy.
And despite some low approval numbers for President Joe Biden, it appears that many of the administration’s efforts to reduce the financial burden on working Americans has cooled inflation down based on numbers from October.
The numbers from October show that a key U.S. inflation gauge fell by the most since 2020.
Alice Wallace of CNN reported, “U.S. wholesale inflation cooled off in October, reversing a three-month trend that had seen the cost of energy push up prices, according to data released Wednesday by the Bureau of Labor Statistics.
“The Producer Price Index, which measures the average price changes that businesses pay to suppliers, fell 0.5 % on a monthly basis. It’s the largest monthly drop since April 2020, when the rapidly spreading Covid-19 virus caused sharp economic contraction.
“October’s decline also marks a sharp turnabout from the 0.4% monthly jump in September, when food and energy prices raised the cost of goods. Energy prices fell 6.5% in October from the previous month, with gasoline sinking 15.3%, contributing to a 1.4% drop in goods inflation.”
Chris Rupkey, chief economist at FwdBonds said, “Producer prices are lower based on falling energy prices, which should keep price gains to a minimum next month as well. Fed officials are getting to keep their cake and eat it too, so far with economic growth and inflation cooling. There is no sign the economy is about to go over the recession cliff, however, so substantive interest rate cuts are going to have to wait for now.”
Despite the positive news, economists know much more is needed for America to say that it has survived the historically high levels of inflation over the past few years.
Indiana University Kelley School of Business associate professor Andrew Butters said, “There’s been a lot of promising signs in the PPI and the CPI report that came out this week. But I think it would be a little too ambitious to say, ‘Victory for the Fed. We’re all done. Inflation is under control.’
“There’s still a ways to go,” he added. “The optimistic view of this is that we’ve made a lot of progress—without seeing much in the way of a significant deterioration of the labor market.”
Because of rising inflation, American homebuyers have felt the heat over the past few years as well.
To cool inflation, the Biden administration periodically raised interest rates so that Americans might cool their spending habits.
Unfortunately, raising interests makes home purchases more expensive.
However, recent data shows that while home prices remain high across the country, several locations have seen home prices decrease significantly.
Alexander Fabino of Newsweek reported, “The nationwide trend shows home values climbing in most areas. However, the National Association of Realtors’ (NAR) third quarter housing market report finds there are a few cities, including Austin, Texas, Honolulu, Hawaii, and Jackson, Mississippi, where the tides are turning and homes are becoming that bit more affordable.”
Fabino added, “Nationally, the housing market remains resilient with more than 80 percent of metro areas seeing price hikes, pushing the median home cost to $406,900, according to NAR. The wealth accumulation for homeowners since the pre-pandemic days is notable, NAR chief economist Lawrence Yun said, with typical homeowners seeing their net worth surge by over $100,00.”
Despite some people seeing their wealth grow because of the housing climate, homeownership remains a big hurdle, especially for millennials and those younger, in many areas.
Yun said, “The persistent lack of available homes on the market will make the dream of homeownership increasingly difficult for younger adults unless housing supply is significantly boosted.”
The Biden administration has also boasted about consistent job growth, saying that shows that the economy is thriving under his presidency.
Megan Lebowitz of NBC News reported, “The U.S. added about 336,000 in September, nearly twice the Dow Jones prediction of 170,000 jobs and above the monthly average of 267,000 jobs over the past year, according to the newly released report by the Bureau of Labor Statistics. The unemployment rate in September stayed the same at 3.8%.”
Many of Biden’s critics say the job increases are due, in part, to Americans having to take multiple jobs to make ends meet considering inflation.
Nevertheless, Biden says that the job increases are because his administration is growing the economy.
The 46th President of the United States said, “My dad had an expression. He said, ‘Joey, a job’s about a lot more than a paycheck. It’s about your dignity. It’s about respect. It’s about being able to look your kid in the eye and say, ‘Honey, it’s going to be O.K., and mean it.’ Well, 336,000 more Americans, if they have children, can say that to their children and mean it.”
Biden added, “It’s no accident. It’s Bidenomics. We’re growing the economy from the middle out and the bottom up, not the top down.”
Bidenomics is the term coined by the current White House to describe his economic policies, much like former President Ronald Reagan had Reaganomics in the 1980s.
Newsweek’s Lebowitz reported, “The job gains took place in the leisure and hospitality, government, and health care industries, among others. The labor force participation rate—which includes those working or looking for work—also remained steady at 62.8%.”