Joe Biden is fond of telling Americans the “U.S. economy is strong as hell.” Federal Reserve Chair Jerome Powell’s recent announcement that he expects to make three interest rate cuts in 2024 seems to support Biden’s opinion on the economy.
After Powell made his rosy forecast for 2024, some reporters claimed our troubled economy would make a “soft landing” and avoid an economic recession. Corporate executives are not convinced. Jamie Dimon, CEO of JP Morgan Chase, is skeptical.
In late November, Dimon said, “A lot of things out there (in the economy) are dangerous and inflationary. Be prepared.”
The Labor Department’s November jobs numbers might not support Powell’s forecast. Though the report showed the economy added 199,000 jobs and the unemployment rate fell to 3.7 percent, the report might have reflected economic relief that unions for autoworkers and actors reached agreements to return to work. Hiring in associated industries may have also influenced the November jobs report. The December report should indicate if job growth is firm.
If the economy has a “soft landing” in 2024, it may not be an economically happy occasion for all Americans, including Biden. Inflation is historically high, and wage growth has not kept pace. Translation: Families are experiencing economic pain. Income inequality, which Biden and Vice President Kamala Harris have promised to tame, could continue to grow.
If inflation holds or increases in 2024, policymakers could renew their calls for Guaranteed Basic Income, or G.B.I., especially for low-income households and the chronically unemployed. Biden’s decision to cancel student loan debt might temporarily increase employment, but it likely would not result in increased employment by the students who had the loans. They were “debt justice” activists; they could become G.B.I. activists.
Millions of illegal immigrants entering the U.S. workforce deny work to U.S. citizens. Increased use of robotics at restaurants, warehouses and other entry-level jobs could prevent immigrants from working. Employers may not be enthusiastic about hiring non-English-speaking employees due to the possibility of on-the-job accidents, workers’ compensation claims, negative publicity and lawsuits. Employers must be careful whom they hire.
The political showdown between Congress and the administration over closing the southern border in exchange for billions of dollars in aid for Ukraine has important implications for the 2024 economy and Biden’s re-election.
Sanctuary cities and states lack funding to provide services and healthcare for millions of illegal immigrants. If Washington sends dollars to bail them out, that could upset current economic calculations for a “soft landing” by worsening the federal budget deficit and increasing inflation.
If Biden does not get more funds for Ukraine, Defense Secretary Lloyd Austin III has floated the possibility of sending U.S. troops to help Ukraine defend against Russia. If this was a threat to politicians on Capitol Hill, Congress did not blink when Ukraine President Volodymyr Zelensky was in Washington in December.
Biden’s bluff on troops to Ukraine at Christmas did pay off. It was stupid. It hurt him politically. When Biden reverses his open border policy by admitting he was wrong and Trump was right, he will have no one but himself to blame.
The U.S. economy may have a “soft landing” in 2024. Joe Biden could have a hard political crash.