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Joe Biden is dealing with a confusing and unpredictable economic outlook as twin threats to rising inflation and slow job growth shake confidence in the stability of the pandemic recovery in the US.
The U.S. Department of Labor announced this month the pace of job creation it slowed down considerably in April, fueling concerns with widespread disagreements in the labor market.
He followed up on that report with figures released last week, showing his unexpected sharp jump last month consumer price index, increasing fears of rising inflationary pressures.
The data reveals that Biden’s sharper criticism of Republican economic management has sparked hope for a smooth rebound from the coronavirus crisis, behind harsh fiscal stimuli and accelerating vaccinations.
USA has driven a global economic recovery, with the NDF forecasting gross domestic product growth of 6.4% in 2021.
“There are many signs of a resurgence in aggregate demand – an economy that is recovering, but that recovery will be chaotic,” said Wendy Edelberg, Hamilton Project Director at the Brookings Institution. “And yes, it’s very difficult to manage.”
High-ranking officials in the Biden administration have warned that not too many conclusions can be drawn from the data for a month. They argued that the average monthly job creation in the last three months was much stronger than in the previous quarter rebound in inflation it is likely to be transient and keep recovery on track.
But they also acknowledged the high level of economic uncertainty at the time of major changes in spending patterns and employment trends and health-related cuts. they are rising faster than expected across the country – partly because of the pace of the country vaccination campaign.
“There will be a period when supply starts to be the same as demand and as the sectors heal and revitalize, [during which] there will be smallness, ”Cecilia Rose, chair of the White House Council of Economic Advisers, told reporters on Friday.
“We know that the imbalance between the different sections of the economy will appear in unexpected ways until the economy is fully recovered. As the President requested earlier in the week, we need to be patient,” he added.
Criticisms of the economic policies of the administration – those of the former Democrat Treasury Secretary Larry Summers Republicans in Capitol Hill – have used the latest data to argue that the Biden administration has cautiously ruled out the risks of excessive fiscal stimulus and reduced economic warning signs.
“I was worried about inflation and everything moved much faster, much earlier than I expected. That should make us nervous looking forward,” Summers said. he wrote On Twitter on Friday.
“I think there’s a good chance it’s going to work well. And we’re just doing a very quick recovery and a great year,” said Michael Strain, director of economic policy studies at the American Enterprise Institute, a conservative think tank. “I think there’s also a chance that this option could end very badly.”
Other data last week did not clarify the photo. University of Michigan Consumer Sentiment Index show raising long-term inflation expectations, retail sales were flat after a big jump in March last month. On the brighter side, weekly jobless claims fell to a minimum on Thursday as a result of the pandemic.
Cecilia Rouse said: “There will be a time when supply is starting to have the same demand and sectors are healing and reviving, [during which] there will be smallness’ © Reuters
At this stage, the White House had no clue how much change had been made in Biden’s political agenda to deal with the economic picture. As for the labor market, the president urged citizens who were offered “appropriate” jobs to meet the requirement to receive unemployment benefits, and Rouse said the White House reminded companies of the tax credit for retaining workers. his stimulus program.
The White House maintains its fiscal support with the support of congressional Democrats, not only to spark the country’s recovery, but also to help. low-income families. He also expressed his confidence To manage the Federal Reserve any rise in inflation.
But Republicans and conservative economists have called for more dramatic actions to cool the economy, such as an early end to federal unemployment benefits because states led by Republicans across the country have refused to pay.
Meanwhile, data released in recent days by economists who misjudged forecasts warned that hypotheses about the U.S. recovery (let alone policy changes) should be reconsidered.
“We’re in such unfamiliar territory,” Edelberg of the Hamilton Project said. “When you’re talking about changes in the aggregate demand we’re experiencing and the changes in the supply we’re experiencing – regardless of the uncertainty you might have about normal times in inflation, increase it in order of magnitude.”
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