Don’t look now, but 2023 is stacking up to be one hell of a year.  Unemployment is at an historic low of 3.7%; the stock markets are around all-time highs; inflation is coming down without dragging the economy with it; economic growth has been encouraging; and many analysts, including the Congressional Budget Office, are predicting a “soft landing” of the economy in 2024.  What’s not to like?

Okay, I know, there are tons of problems out there.  But allowing them to overshadow what’s positive won’t help anything.  In fact, it saps our strength and resolve to turn back the forces of evil.  We should remember the famous quote from FDR’s first inaugural address on March 3, 1933, during some of the darkest hours of the Great Depression: “The only thing we have to fear, is fear itself.”  Roosevelt cautioned the nation that “nameless, unreasoning, unjustified terror” paralyzes needed efforts to convert defeat into victory.

There are many theories as to why there is such a huge disconnect between voter perceptions of the current economy and the reality of it.  Some say their attitudes haven’t recovered from two years of the depressing pandemic and the negativity of 2022, with its high inflation, struggling stock market and slow growth.  That can’t last, however, particularly if 2024 turns out as experts are predicting.  And an economy that is providing good jobs, reasonable growth and moderate inflation is always good for an incumbent president.

So, let’s take a look at the economic indicators heading into the election year.

Congressional Budget Office’s current projections are that real GDP will grow by 1.5 percent in 2024 and by 2.2 percent in 2025, as measured from the fourth quarter of the previous year.  Of course, the CBO is not always spot on; growth could be higher or lower, but at least its analysts are not predicting a recession.  And neither are those of the nation’s top financial institutions.

Earlier this month, Federal Reserve policymakers signaled that they anticipate cutting rates by 0.75 percentage points in 2024, and another full point in 2025.  They are also projecting 1.4% growth next year, and the unemployment rate edging up only to 4.1%, which is still quite low.  This means that interest rates will likely be coming down next year even with a growing economy.  And that bodes well for financial markets, families and businesses.  Oh, and for President Biden too.

I can’t count the times I have reminded readers that consumer spending is around 70 % of the U.S. economy (GDP).  “The American consumer continues to surprise to the upside,” and “the holiday shopping season is off to a strong start,” according to an article by Courtenay Brown, author of Axios Macro.  Hmm, if Americans are truly worried about inflation and the economy, why are they spending like crazy?  

November sales were up by 0.6% over last November, excluding gasoline sales that were down, probably due to lower prices at the pump.  Gasoline prices are one of the most recognizable signs of inflation, prominently displayed on thousands of streets all over the nation.   Drivers can’t help but notice how much lower they are now.

The Bureau of Labor Statistics’ third quarter report showed that labor productivity rose at an annual rate of 5.2 percent, according to economist Paul Krugman’s recent article.  That means wages can rise without pumping up inflation, which has slowed significantly, from 5.7 percent in March 2022.  And, the full-employment economy on Biden’s watch has led to a significant drop in wage inequality, with the lowest-paid workers achieving large gains that are exceeding inflation. 

That brings me to a December article entitled, Joe’s Truly Excellent Economy, by Johnathan V. Last, editor of The Bulwark, a news and opinion website that presents political commentary by anti-Trump, center-right conservatives, like Bill Kristol and Charlie Sykes. 

Mr. Last described the U.S. economy as “soaring” after it grew by a 4.9% pace in the third quarter.  He contrasts that with the European Union, whose economy also recovered significantly from the pandemic, but much less than the U.S.  And he believes Biden should get credit for that performance. 

He also points out that the reason the Bureau of Labor Statistics expects slower job growth for the next ten years is because America is close to full employment.  “You can only add so many jobs to an economy where everyone is already working,” he correctly observes.

Also on the Bulwark: “By staying the course, not panicking, and letting the growing economy do the work, Biden will be in a strong position for reelection simply because of the fundamentals.”

Yes, a lot can happen in 2024 that could dramatically affect the presidential election.  In fact, it usually does.  I try to avoid paying much attention to recent polls.  They are virtually meaningless at this point in the game.  Barack Obama was labeled a sure loser in October 2011, but he won in 2012, even with a 7% unemployment rate and a mediocre economy.  Many believed this was because voters could see that the economy and their future was looking brighter, which is what I believe they will realize next year.

Being mired in doom and gloom, however, won’t help anything.  So, let’s all contribute to democracy-loving candidates and do all we can to send the would-be dictator to the dustbin of history and make sure 2025 will be a good year too. 😊

Here’s wishing you and yours a Merry Christmas, or a happy Hanukkah and a warm holiday season, whatever you are celebrating, followed by a productive and prosperous New Year.