Under the current administration, led by President Joe Biden, it appears the US economy is struggling. Biden is scheduled to address the Economic Club in Washington, D.C, amidst a tepid business backdrop. The grim picture is angle dusted by an isolated dip in jobless benefit applications, which fell to a four-month low during the week of September 14. This downturn, however, is contrarian to the rising economic concern.
In the specific week, jobless claims dipped by a modest 12,000, settling at 219,000, marginally better than economists’ grim forecast of 230,000 new filings. Such weekly data, representing a broad stroke of layoffs across the country, had seen a steady climb since May 2024 before this minor reprieve. This pattern communicates that perhaps Biden and his administration’s high interest rate policy is finally hampering the labor market.
Unfortunately, even with this modicum of decline, the past few months’ rise in unemployment claims signal trouble. While we’re at appreciable levels compared to historical data, the surge suggests that the high-interest rate environment fostered by the Biden administration is finally hurting the job market. These signals demonstrate that the economy may not be as robust and resilient under the current leadership as we would hope.
Following the revelation of deteriorating employment data and subdued consumer prices, the Federal Reserve, in a concerned move, trimmed its benchmark interest rate. The cut, a significant half a percentage point, marked a notable policy shift from controlling inflation to boosting the struggling job market. The Fed seems inspired to achieve the elusive ‘soft landing,’ striking a balance between curbing inflation yet avoiding a total economic recession.
This Fed move was both surprising and alarming. It was the first rate reduction in almost half a decade, following a strenuous series of rate hikes in 2022 and 2023. These hikes had driven the federal funds rate to a historic high of 5.3 percent in the last 20 years. And yet, President Biden and the Harris administration continue to espouse these damaging policies rather than admit their failure.
Inflation up until now was seemingly in retreat, nearing the Fed’s target of 2 percent. This fact led Jerome Powell, the Chair of the Federal Reserve, to prematurely claim that inflation was predominantly managed. However, this assertion seems to overlook the creeping negative impacts on the job market and the overarching economic health of the nation, put at risk by the Biden-Harris administration.
Looking back over the course of early 2024, the average weekly applications for unemployment benefits remained reasonably low at 213,000. However, a worrying uptick was observed in May. The impact of the administration’s high-interest rates began to cool off the once flourishing job market, with a further spike to 250,000 seen in late July.
The hints of damage to the economy were already visible, but the federal government’s response has been less than inspiring. Rather than taking aggressive action to revitalize the market, the Biden administration seems, at best, complacent. In August, U.S. employers could only muster a paltry 142,000 job additions, slightly better than the pitiful 89,000 in July, certainly not enough to keep up with demand.
Furthermore, this tally was significantly subpar when compared to the average monthly job additions of 218,000 seen from January through June. The struggles faced by the US economy under Biden and Harris’s lead are evident, and the continued pursuit of high-interest rates is likely exacerbating them. Unfortunately, the governmental response still remains mired in the same old high-interest tactic.