Morgan Stanley recently increased its growth estimate for the last three months of the year to an annualized rate of 8.7% from 3% due to strong consumer demand and falling jobless claims. Goldman Sachs sees 6 percent growth and JPMorgan has increased its projection from 5 percent to 7 percent. The Federal Reserve Bank of Atlanta, whose model incorporates most of the economic data in real time, forecasts a jump of 9.7%.
“There is still huge momentum in this economy,” said Rubeela Farooqi, chief US economist at High Frequency Economics, who said fourth-quarter growth is expected to be at least 6%.
That momentum could be compromised with the emergence of the new Omicron variant of Covid, potentially giving Republicans ammunition for the mid-terms of 2022 and leaving the White House to scramble to respond to the latest outbreak.
Biden spoke to the nation on Thursday about the government’s plans to deal with the new strain, which was identified on U.S. shores on Wednesday. contributing to the turmoil in the financial markets. The administration is well aware that any return to blockages or widespread panic about the variant could dash its economic hopes.
The president laid out a plan for expanded vaccine boosters, free home tests and stricter protocols for international travel. He also stressed stronger protections in the workplace “to keep our economy open”.
“We don’t yet believe that further action will be necessary,” Biden said, avoiding talking about new stops. “We are in a better position than we were a year ago to fight Covid 19,” he said, adding that the United States is “on track for rapid economic growth in four decades “.
True, the huge numbers expected in the fourth quarter reflect production and spending delayed earlier this year by the Covid Delta variant, and many economists were already predicting that the start of 2022 would be slower even before the virus was announced.
Republicans are not wrong to say Americans are increasingly gloomy about Biden’s economy given the rise in the prices of food, fuel, rents and almost every other item that makes up the budget. monthly household. The Consumer Price Index rose 6.2% on an annual basis in October, the fastest rate in more than 30 years as Americans overflowing with cash accumulated during the pandemic fought over goods and services which remain constrained by supply chain disruptions and labor shortages. While the oil market has been rocked by the Omicron variant, price hikes in recent months have driven up gas prices and shook consumer confidence.
That, coupled with fear of Covid’s future, has helped drive down Biden’s approval ratings, especially on the economy. An NPR / Marist poll put his approval at 42 percent, the lowest since he took office. Inflation topped voters’ concerns to 39%.
Republicans are looking to capitalize on anxiety over the price hike, saying they are largely driven by Biden’s large spending plans.
Senator Tim Scott (RS.C.) called the inflation figures a political “gold mine” for the GOP, which prompted Biden Twitter retorts Wednesday. “Imagine rooting for higher costs for American families just to score a few political points,” the president tweeted.
Rep. Blaine Luetkemeyer (R-Mo.) Told the Missourian newspaper that Biden’s spending programs would be a “disaster” and cited the Carter era. “This is going to bankrupt us,” he said. “And it’s going to cause stagflation, and it’s going to cause inflation. “
Missouri GOP Senator Roy Blunt offered a history lesson in a floor speech, recalling the Carter administration when soaring oil prices pushed up gasoline costs.
“A lot of Americans alive today, certainly a lot of Americans who are in the workforce today, don’t remember the inflation of the 1970s and early 1980s that made it difficult to keep track of families. , made it difficult for families to buy a house, made it difficult for families to pay basic bills. But it sure looks like we are.
In Ohio, GOP Senate candidate Bernie Moreno recently ran a TV commercial comparing Biden to Carter.
“My parents came here for the American Dream, a dream briefly crushed by Jimmy Carter,” Moreno said in the 30-second spot. “Failed policies causing massive inflation. Now Joe Biden and the Socialists are picking up the same playbook. “
It’s a line of attack that the White House and Congressional Democrats know could prove devastating. So they’re counting on faster growth the rest of this year and into next year and an easing of supply constraints to make sure the GOP approach doesn’t stick.
“The real economy is generally doing very well and unemployment is lower than most thought,” said Harvard economist Jason Furman, who has been a key aide to President Barack Obama. “GDP growth promises to be very strong in the fourth quarter. We are not yet back, but we are close and this comes after we have been torn apart by Covid. ”
Furman said that “the political problem is that 100 percent of Americans are affected by higher prices, so it would be good if they eased as soon as possible.”
A White House official said it was too early to determine the impact of the Omicron variant on the economy, but added that “we are in a much better position” than at this time of year. last. “We know how to fight Covid-19 and pursue a strong economic recovery at the same time,” the official said. “We have the tools we need to protect ourselves from this virus. “