What is the state of the United States economy? Does a recession still loom on the horizon? Are the Federal Reserve's efforts to fight inflation working?
Here's a roundup of recent economic news and forecasts.
Jobs: In July, the U.S. economy added 187,000 jobs, and unemployment dropped to 3.5%, according to data from the U.S. Bureau of Labor Statistics. The job growth fell below expectations but was still deemed a positive sign, with outlets noting that unemployment is near a 50-year low. Health care, social services, financial activities, and hospitality experienced the most growth.
Wages: In late July, the Bureau of Labor Statistics released data on second-quarter 2023 worker wage growth, revealing civilian worker wages grew 1% during the quarter. This was a drop from the 1.2% wage growth workers experienced in the first quarter. This data was deemed bad news for workers but good news for the economy, indicating the Federal Reserve's efforts to slow economic growth to fight inflation are working.
Inflation: Speaking of inflation, it rose 0.2% on a monthly basis in July and 3.2% annually, a slight uptick from the 3% annual inflation recorded in June. This 3.2% figure broke a 12-month trend of falling inflation rates. Comparing prices to one year ago, shelter, food, and core prices are up, while energy and used vehicle prices are down.
GDP: Overall, the U.S. gross domestic product (GDP) beat expectations in the second quarter of 2023, growing 2.4%. This was framed as good news across the spectrum, but it did not quell recession fears from some economic analysts.
Credit Rating: Despite a growing economy, political turmoil led Fitch Ratings, one of the “Big Three” credit rating agencies, to downgrade its rating of U.S.-issued debt from AAA to AA+. Fitch cited Washington's debt-ceiling standoff in May as an indication of an "erosion of governance." The downgrade was refuted and dismissed by both the White House and Treasury Secretary Janet Yellen.
How the Media Covered It: Economic optimism has grown across the spectrum, but there remain skeptics on both sides of the aisle. Left-rated voices have been quicker to determine recession fears are no longer necessary. On the right, negative economic reporting typically leans heavily on the term 'Bidenomics,' deeming the White House out-of-touch for praising the economy while workers still feel the negative impacts of inflation.
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- Opinion from the Center: "Since it appears that a judge and jury will not derail Trump from his current path to the nomination, the task falls to the candidates running against him."
Snippets from the Center
"While noting that risks are still high and growth ahead is likely to be slow, the bank’s forecasters think the data flow indicates a soft landing is possible. That comes despite a series of interest rate hikes enacted with the express intent of slowing the economy, and several other substantial headwinds."
"The signs of commercial real estate distress are already visible, especially in the office sector. In the first quarter of 2023, the office vacancy rate reached 18.6%, 5.5% higher than it did in first quarter 2020 when the pandemic began. This is a larger trough-to-peak increase than the 4.6% increase during the Great Recession."
Snippets from the Left
"To be sure, matters are hardly perfect. The number of job openings has been falling, banks still have problems with non-performing commercial loans, and inflation is still too high, among other problems. Nonetheless, especially considering what could have happened after a pandemic that killed well over 1 million Americans, the US economy seems unreal, in the best sense of that term."
"Here's another bit of positive news: Wages are finally outpacing inflation, boosting workers' buying power. Average wages in July were up 4.4% from a year ago. Wage gains have moderated in the last year, but inflation has cooled as well, so workers' paychecks now stretch farther. For the twelve months ending in June wages rose 4.4%, while prices climbed just 3%."
Snippets from the Right
"Biden seems exquisitely out of touch with the hurt people are feeling — so much so that he is spending the next few days campaigning on how his policies are making a strong economy. When filling your gas tank costs more than $75, it's not hard to understand why recent polling has shown voters are saying no thanks to Bidenomics."
"The Biden White House has giftwrapped for the GOP a message it would otherwise have had to craft and popularize on its own. Will the economy improve over the next 14 months? Probably. Will it improve to the point that voters’ impressions of it go from bad to good by the time early voting in the 2024 race begins? That seems less likely. Good luck, Mr. President."