Economic data points ‘real momentum’

WASHINGTON: Higher consumer spending over the holiday season, real wage gains over the last nine months, and a jump in consumer confidence point to a good start for 2024, says Jared Bernstein, chairman of the White House Council of Economic Advisers.

Bernstein told Fox News Sunday that President Joe Biden would continue to focus on lowering costs for Americans if he won a second term in the November 2024 presidential election.

“If you actually look at the trend in the economy, I think you see some real momentum getting us off to a good start for the new year,” Bernstein said.

US consumer confidence increased to a five-month high in December, the Conference Board reported on Dec 20, mirroring a nearly 14% increase in the University of Michigan’s benchmark Consumer Sentiment Index, its biggest jump in more than three decades.

For most of Biden’s term, the Michigan index has reflected widespread pessimism among households about the economy, but the new data showed Americans’ growing confidence that inflation was finally trending lower.

Michigan survey director Joanne Hsu said the upswing in December reversed “all declines from the previous four months. These trends are rooted in substantial improvements in how consumers view the trajectory of inflation”.

Indeed, inflation has eased substantially over the course of 2023. The Labour Department’s Consumer Price Index began the year with annual price increases averaging 6.4%.

By November, that was down to 3.1%.

Bernstein said that petrol was below US$3 for 4.5 litres in more than half the states.

The US national average retail petrol price could drop by 13 US cents next year to US$3.38 for 4.5 litres, a second straight year of dropping fuel costs, according to price tracker GasBuddy.com’s annual outlook.

“This has been a very strong Christmas season,” Bernstein said, adding that spending at restaurants rose 8% from Nov 1 to Christmas Eve, with spending on online sales up 6% and overall retail spending rising 3%.

Despite the growing optimism, the Biden administration said it remains alert to geopolitical risks, including Russia’s ongoing war in Ukraine, which has the potential to disrupt grain markets and push up inflation again.

In the Middle East, Israel predicts its war with Hamas militants will last for months, increasing the risk of regional escalation.

In the Red Sea, attacks by Iranian-backed Houthi militants in Yemen have disrupted world trade.

Maersk, one of the world’s major cargo shippers, said on Sunday it would pause all sailing through the Red Sea for 48 hours after a Houthi attack on one of its container vessels.

Bernstein also cited big gains in the startup of new businesses, especially by people of colour.

He said this reflected more optimism and confidence about the United States economy.

Bernstein said the Biden administration was keeping an eye on rising credit card debt but saw it as a return to normal levels of delinquencies or debt levels.

Record increases in wealth among Americans of all income levels and among people of colour would also help offset the increases, he said. — Reuters