White House optimistic about the economic recovery in 2023

WASHINGTON — Despite the ongoing turbulence caused by the coronavirus pandemic and the shock of war in Eastern Europe, the American economy is in sound health, top Biden administration economist Jared Bernstein asserted in an end-of-year interview with Yahoo News.

Bernstein predicted that the next year would not bring about massive gains or rapid growth. Instead, the American economy will be able to avoid both the inflation of 2022 and the recession which occurred after the Federal Reserve raised the interest rates to stop price increases.

“I think there are reasons to be optimistic,” Bernstein said. “There are tailwinds and headwinds in this economy, and I spend my days tracking both of them,” he added. He believes that the headwinds are diminishing (inflation is still high). is falling) while the tailwinds are picking up (the pandemic is over, sort of).

Bernstein and other economists desire nothing more than for America’s economy to continue at cruising speed for twelve months. A year that is unremarkable only because it is so ordinary. This is how winning might look in 2023.

“It’s going to be gloriously, boringly normal,” University of Michigan economist Justin Wolfers recently predicted. “I’m not saying there’s no recession. But if there’s a recession, it’ll be a boring recession. And if it’s a boom, it’ll be a boring boom.”

Critics counter that confidence in Biden’s management of the economy is unwarranted. In particular, they argue that it was Biden’s spending, not the pandemic or the war, that caused inflation to spike in the first place. The fact that inflation is currently high in other countries has challenged this argument. have much higher inflation ratesThe problem is global, therefore the answer is a.

Jay Powell, Chairman of Federal Reserve, is the subject of some criticism. who has acknowledged that, throughout 2021, he did not see inflation coming. Biden frequently voices his respect for the Fed’s independence when asked about the health of the economy. The president reminded people, whether intentionally or not, that Powell should share some of the blame if the recovery is not successful.

Recession is the most immediate threat to the U.S. economic health in the next year. A Bloomberg poll has shown this. economists says there is a 70% chance of one in 2023. Massive job losses at some of the biggest Silicon Valley firms This has led to the now-familiar exchanges of I-told_you-so recriminations as well as nothing-to-see here reassurances in Washington. Every new piece of economic news is often seen as a referendum for the White House.

Bernstein, 67 years old, was trained in volition and opinion. the double bass At the Manhattan School of Music, before finally exchanging numbers for notes. He worked as Biden’s chief economist during the first term of the Obama administration, pushing progressive policies in ways that put him at odds with centrists like Timothy Geithner, who served as President Obama’s treasury secretary during the financial crisis of 2007-08. In 2011, Politico deemed Bernstein the administration’s “lost liberal voice.”

Today, Bernstein serves on the president’s Council of Economic Advisers, which also includes Heather Boushey and Cecilia Rouse, its chair. His spacious, sparsely decorated quarters in Eisenhower Executive Office Building overlooks the West Wing. Books by Amy Klobuchar (liberal senator from Minnesota) are displayed on his bookshelf. libertarian publisher Steve Forbes Share space. And in his quick and discerning mind, forecasts from Goldman Sachs compete with reports from China’s manufacturing sector to paint a picture of the global economy that is, on the whole, a lot clearer — and brighter — than it has been in recent years.

Bernstein believes that the economy has already moved from the unsustainable job gains of 2022 and is now moving at a slower pace with the Federal Reserve as its guardrails. that has raised interest rates by 425 basis points This is the year.

“I think there are reasons to be optimistic that the path to a steady and stable transition is plausible and credible,” Bernstein says. He cites a recent analysis by Goldman Sachs economist David Mericle, which contends that “an extended period of below-potential growth can gradually reverse labor market overheating and bring down wage growth and ultimately inflation, providing a feasible if challenging path to a soft landing.”

Every new development is scrutinized closely during the anxious moments following the pandemic. The number of new jobs added each month is one of the most closely watched. Powell’s attention to this is a well-founded concern the monthly jobs reportsHe sees an affront in his anti-inflationary policies and responds by raising interest rates. Employers will be more likely to fire workers than hire them as borrowing money becomes ever more costly.

The Fed “sees the labor market as the mechanism by which they can solve the inflation problem,” economist Neil Dutta of Renaissance Macro told the New York Times It was revealed that November saw a 263,000 job gain, which is probably too fast for Powell.

Daniel Bachman, an analyst for Deloitte in the area of financial risk management, predicts that 2023 could be a “growth recession” year, a necessary corrective that will see hiring and economic growth lose ground — without plummeting. However, he doesn’t think the slowdown would be the same as the recession that followed 2007’s mortgage crisis.

“So far, it’s safe to say that the recession is mostly in people’s minds,” Bachman wrote.

The Biden administration wants Americans to accept 2023 as a price for foundational stability. Economics? has always been a matter of faithThis is especially true for White House officials like Bernstein who don’t come from high finance or the academy but are committed to Democratic economic policy.

“I think the general trend is our friend, and that the data flow has been complimentary to this framework,” he says — as one expects he would.

It is possible to find out how much patience Americans have in 2023 by looking at the presidential election in 2024. This is something that the White House is very aware of. Three years of people have been hounded by lockdowns and shortages of goods. There have been many relief packages. Gas prices rose but now are falling. The supply chains erupted, but the problems were eventually solved. Will the new year bring fresh chaos, or will the economy — both at home and across the globe — return to normal?

“Some of this stuff you can’t make up. I don’t know what normal is anymore,” McKinsey senior partner Daniel Swan told the Associated Press.

Although the White House said the exact same thing, it did so more slowly. They want Americans to remember that the persistence of the coronavirus pandemic and Russia’s invasion of Ukraine presented such enormous economic shocks that they would take more than a few months to handle.

Bernstein asserts that the Biden administration actually is dampening each of these shocks. He points to administration efforts to “unsnarl” supply chain problems — problems exemplified by images of cargo ships waiting off the California coast — and the release of 180 million barrels of crude oil The Strategic Petroleum Reserve

This decision, along with other developments has helped to bring gasoline prices to less than $3 per gallon in many parts.

“That’s breathing room,” Bernstein says.

As much as the Biden Administration is stuck between recession and inflation it is also caught between moderates that favor fiscal restraint or progressives that claim inflation worries caused the Biden Administration to abandon its social priorities which would have required trillions of dollars more.

Since Republicans have regained control of Congress, the White House doesn’t anticipate any of its legislative priorities being realized. Instead, the White House wants to see real-life benefits for ordinary citizens from 2022’s legislative accomplishments.

“He deeply, deeply cares about implementation,” Bernstein says. Biden relates how, following the 2009 passage of the American Recovery and Reinvestment Act, he would call small-town mayors in order to check how they were using federal money. This was to avoid the Obama administration being branded as a wasteful government spending machine.

“I vividly recall him hauling us all into his office and saying, ‘I don’t want to hear about one dead tree being planted,’’ Bernstein says.

Today, he’s confident that the seeds for the economy’s new normal have already begun taking root and that, in the new year, the hundreds of billions of dollars already devoted to spending on infrastructure, green energy and infrastructure will begin paying dividends.

It is a prediction that can be trusted. If this prediction is true, it will become evident very soon.