Dem
49
GOP
51
A Democratic president is about to ride off into the sunset. And, as with most of his Democratic predecessors of the last half-century (sorry, Jimmy Carter), it looks like he'll leave office with an economy that is hot, hot, hot.
Let's start with inflation. For the first year of the Biden presidency, smack dab in the middle of the pandemic, the annual rate of inflation was 7%. The next year, 2022, was not much better, at 6.5%. But as the pandemic receded, and various kinks in the economy got straightened out, inflation dropped to 3.4% for 2023. And for 2024, according to the latest numbers from the Department of Labor, it's down to 2.5%.
Meanwhile, the unemployment rate is holding steady at a shade above 4%. Economists consider anything below 5% to be, effectively, "full employment"—that the economy is keeping as many people employed as is practicable. On top of that, average earnings increased 0.4% in the last month, and are up 3.8% over the last year. That, of course, is higher than 2.5%, so people's purchasing power, on average, is up over the past year.
How about specific commodities? Well, at the height of the pandemic-era inflation, eggs cost an average of $4.82/dozen across the United States. They are now down to an average of $3.20/dozen. Milk was up to $4.20/gallon, on average, now it's down to $4.04. Chicken breast was selling for $4.76 a pound 2 years ago, now it's down to $3.95 a pound. Note that different commodities play by different rules, such that there's never a time when they are ALL way down in price. Bread, for example, is down, but only by a few cents per pound, while beef is actually up by about 30 cents a pound (to $5.57) compared to 2 years ago. Still, on the whole, it's cheaper to fill a grocery cart than it was in late 2022 or early 2023.
Of course, the mother of all commodities—since most people buy a fair amount each week, and so tend to be pretty sensitive to price changes—is gasoline. One year ago, the average price of a gallon nationwide was $3.87. A little over 2 years ago (on June 14, 2022, to be precise), the U.S. set a record for the highest average price per gallon, at $5.02. Yesterday (the AAA maintains a daily average), gas was down to just $3.20 a gallon nationwide. The only state where gas prices are not dropping, in fact, is California. Guess those pinkos get what they deserve. At least, the ones not wise enough to drive electric vehicles.
So, inflation is currently well controlled, wages are growing, and prices are falling. These are exactly the things the Federal Reserve Bank likes to hear, and so when they meet tomorrow, they are expected to cut interest rates. This will be the first time the Fed has done so in a bit over 4 years (since March 2020). The only question is how big the cut will be; some analysts are arguing that they should keep it small so as to avoid rocking the boat too much, others say it's time to swing for the fences. What this basically means is: Should Jerome Powell & Co. cut the prime rate by 0.25% or by 0.5%?
Of course, the people who drive the stock market love, love, love interest rate cuts. Yesterday, investors pushed the Dow to an all-time high (41,622.08) and drove the S&P 500 to a near-all-time high (5,633.09; the all-time number is 5,667.20). Once the Fed makes an announcement tomorrow, there's a good chance both will set records. (The NASDAQ is down a little right now, but most analysts think it will bounce back, too.)
And finally, a lower prime rate also means lower mortgage rates. This week, in anticipation of the Fed's maneuvering, mortgage rates fell to 6.2% (for a standard, 30-year fixed mortgage). That's the lowest number since February 2023, and is down considerably from the two-decade high of 7.79% in October 2023.
Needless to say, all of these numbers are averages, and not everyone is benefiting equally (or even at all) from the improved economic outlook. It is also the case that circumstances in a particular city or state may vary widely from what is going on nationally. For example, in Nevada, unemployment right now is double the national rate. Still, if you believe that, even in 2024, it's still "the economy, stupid," and that a solid economy in election season makes many voters say "I'll have more of that, please," then things are lining up nicely for the Democrats (i.e., the party in power right now). (Z)