This week in Bidenomics: Bragathon

The long-awaited 2023 recession keeps not happening.

Economists expected to see signs of a slowdown in the jobs report for January. Instead, hiring surged, with employers creating 517,000 new jobs, the most since last July. The unemployment rate fell to 3.4%, the lowest since 1969.

President Trump used to boast about strong job numbers that reflected the “greatest economy ever.” That was hyperbole. Biden has a stronger claim to superlatives. The economy has created 12.1 million new jobs since he took office, the most of any president on record. Job creation during the same span of Trump’s presidency totaled a mere 4.5 million. The unemployment rate has been lower than the current 3.4%, but not since the post-World War II boom of the 1950s.

Biden’s not shy about grabbing credit for an upbeat economy, whether he deserves it or not. On February 3, he called the January job numbers “strikingly good news” and declared, “The Biden economic plan is working.” It’s debatable whether Biden’s policies are triggering this remarkable job growth, but what is true is that the economy is working for Biden, for now, anyway.

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In addition to the seemingly bulletproof job market, inflation is starting to break Biden’s way, as well. The Federal Reserve is winding down its aggressive monetary tightening cycle, with a modest quarter-point interest rate hike on February 1 that markets cheered. The Fed raised rates by a hefty 4.5 percentage points in 2022, but it is likely to push rates up by only another half-point or so in 2023. Stocks jumped on Feb. 1 when Fed Chief Jerome Powell acknowledged that inflation was easing.

The inflation rate has dropped from a high of 9% last June to 6.5%. That’s still too high, given that the Fed would like to see it at around 2%. But the downward trend is encouraging and various signals from spending data and wholesale markets suggest inflation will continue to drop. By the middle of the year it could be less than 5%.