WASHINGTON (AP) – The United States (US) economy faces plenty of threats: War in Ukraine, high grocery bills, spiking gasoline prices, splintered supply chains, the lingering pandemic and rising interest rates that slow growth.
The Biden White House is betting the US economy is strong enough to withstand these threats, but there are growing fears of a coming economic slump among voters and some Wall Street analysts.
The next few months will test whether President Joe Biden built a durable recovery full of jobs with last year’s USD1.9 trillion relief package, or an economy overfed by government aid that could tip into a downturn. On the line for Democrats ahead of the midterm elections is whether voters see firsthand in their lives that inflation can be tamed and the economy can manage to run hot without overheating.
Brian Deese, director of the White House National Economic Council, told reporters this week that the 3.6-per-cent unemployment rate and last year’s robust growth puts the US in a safe place compared to the rest of the world.
“The core question is whether the strength of the US economy is now an asset or a liability,” Deese said. “What we have done over the course of the last 15 months is driven a uniquely strong economic recovery in the US, which positions us uniquely well to deal with the challenges ahead.”
But others see an economy that could struggle to preserve growth while reducing inflation now running at a 40-year high of 7.9 per cent. The Federal Reserve has signalled a series of benchmark interest rate increases and other policies to slow inflation this year, yet Russia’s invasion of Ukraine has destabilised the global energy and food markets in ways that could push prices upward.
