Sorry, Marco Rubio. The economy really is great.
2024 is shaping up to be one of the best economic years of many Americans’ lifetimes.
Energy prices fell 1.9 percent over the month, driven by a decrease in gas prices.
The Fed’s benchmark rate now sits between 4.75 and 5 percent, up from near-zero rates during the pandemic.
Investors in interest-rate-futures markets expect the Fed will cut rates again at its November meeting. They see a nearly 70 percent chance that the Fed cuts rates by a quarter-percentage point, up from about a 65 percent likelihood during the week ending Oct. 2, according to CME Group’s FedWatch tool.
By just about every measure, the U.S. economy is in good shape. Growth is strong. Unemployment is low. Inflation is back down. More important, many Americans are getting sizable pay raises, and middle-class wealth has surged to record levels. We are living through one of the best economic years of many people’s lifetimes. Yet it’s barely mentioned in popular culture or on the campaign trail.
Polarization in the United States makes it difficult to talk about any truth, even about the economy. Last Friday’s jobs report surpassed all expectations. As soon as it came out, Republicans like Sen. Marco Rubio of Florida tried calling it fake. In reality, even if the report is later revised down, it would still show an economy that is humming along. And consider the bigger picture: The United States has nearly 7 million more jobs than it did before the pandemic, and the largest share of 25- to 54-year-olds working since 2001. Many experts didn’t think it even possible for the labor market to become this robust again. Some theories considered Americans too addicted to video games or drugs or simply too lazy to work. The jobs rebound has proved the experts wrong.
The story on inflation is similar. Two years ago, economists were predicting a recession. Many said it was impossible to lower inflation without a downturn and widespread job losses. Yet we are living through this miracle. Report after report shows inflation cooling off. On Thursday, we learned that inflation has cooled to 2.4 percent. It’s so close to 2 percent target again even Federal Reserve officials aren’t that worried about it anymore. And there is no recession in sight.
In addition to defying expectations, the United States has seen much stronger growth than other advanced nations, and the benefits have gone largely to the working class.
All this good news is talked about openly on Wall Street. Investors believe the soft landing is real. This is why the S&P 500 stock market index is up 20 percent this year. Other world leaders are also discussing the rapid U.S. rebound — enviously. Both French President Emmanuel Macron and former Italian prime minister Mario Draghi say the European Union needs to be more like the United States economically.
Yet in the domestic political realm, even Democrats are hesitant to discuss the good economy because of the inflation hangover effect. Many Americans are angry that prices remain high for everything from groceries to houses. Politicians don’t want to sound out of touch by saying everything is fine.
. Wage hikes have exceeded inflation for the past 17 months, and this is helping people get ahead.
It’s important to recognize how much ordinary Americans have recently benefited. Since the pandemic, Americans in the bottom 40 percent of income have experienced the fastest wage growth. What’s more, the biggest surge in wealth since the end of 2019 has gone to the bottom 50 percent. Their wealth nearly doubled largely because of the big jump in home prices. The American homeownership rate is at its highest level since the foreclosure crisis (excluding the weird data from 2020). Hispanic and Asian homeownership is at record highs. These are extraordinary gains.
Nevertheless, the economy is excelling on many fronts, much as it did in the late 1990s. And polls show that Americans are beginning to notice. JPMorgan’s chief global strategist, David Kelly, has pointed out that the “misery index” (a combination of the inflation and unemployment rates) has dropped lower than it has been 89 percent of the time in the past half-century. The best metric to watch is consumer spending. Even as Americans tell pollsters they are gloomy, they keep on spending — especially on eating out, visits to amusement parks and pumpkin patches, and tickets to concerts and sports events. This is yet another signal of a healthy economy.
It should be possible to celebrate such good news, regardless of who might make it to the White House.
