US President Joe Biden began touting the progress in bringing down inflation and boosting employment on Thursday, a day after the Federal Reserve’s interest rate cut, while vowing to keep working to lower costs for American families.
Biden will use an Economic Club of Washington event to summarise how well the US responded to the COVID-19 pandemic and a surge in inflation after Russia’s attack on Ukraine, his chief of staff, Jeff Zients, told reporters.
Many economists had predicted a recession would be needed to lower inflation, but were proven wrong as Biden’s policies aimed at expanding domestic manufacturing, investing in clean energy and other infrastructure, and capping drug costs for seniors helped create 16 million jobs and raised wages, he said.
Polls show Americans remain deeply worried about the economy and inflation, with Vice-President Kamala Harris, who became the Democratic nominee when Biden bowed out of the race in July, and Republican former President Donald Trump essentially deadlocked less than seven weeks before the November 5 US presidential election.
A Reuters/Ipsos poll released this week showed Trump had an advantage on the issue of inflation, which surged under Biden in 2021 and 2022. Some 43% of voters in the poll said Trump would be more likely to “lower prices for everyday things like groceries and gas,” compared with 36% who picked Harris.
Biden and Harris are focused on continuing to lower costs and strengthen the economy, Zients said.
“The president knows this is no time for a victory lap, which is why he will talk about the work ahead … to make the economy stronger, create more jobs and importantly, lower costs,” he told reporters.
Fed Chair Jerome Powell, speaking on Wednesday after the US central bank cut interest rates by half a percentage point, said the economy remained strong but policymakers wanted to stay ahead of and stave off any weakening in the job market. The unemployment rate, now at 4.2%, is more than half a percentage point higher than it was when the Fed began an aggressive rate-hike campaign in March of 2022.
National Economic Council Director Lael Brainard said the Fed’s rate cut sent a “clear signal that inflation has come back down,” noting that inflation was now at the same level seen in the month before the COVID-19 pandemic began.
Mortgage rate reductions that have already happened would save the average home buyer $5,000 a year, with savings to increase as the rates declined further, she said, adding that the cuts would also save the average new car buyer nearly $1,100 over the life of the loan.
But she said further work was needed to drive down housing costs, support childcare needs and sustain the gains achieved for working-class families.
The White House is monitoring geopolitical risks, including escalating tensions in the Middle East, but sees no significant risks to the broader economic outlook, an official said.