Biden on notice as inflation jumps and growth slows

The Federal Reserve now faces “renewed pressure” to further delay interest rate when it meets next week, Bloomberg wrote, and policymakers may even consider “whether borrowing costs are high enough.” A cut in US interest rates is looking increasingly unlikely this year, as “the hot inflation print is the real story in this report,” a Fitch Ratings analyst said. The head of the Federal Reserve Bank of New York told Semafor last week that he doesn’t “feel urgency” to cut interest rates soon, and that the unchanged rates so far “haven’t caused the economy to slow too much.”

Consumer spending has slowed as people get pickier about purchases, but thanks to a strong job market and increasing wages, “Americans are still opening up their wallets, which is keeping the economy afloat for now,” CNN wrote. But the economic picture is still complicated, The Washington Post wrote, as high interest rates have made it expensive for families to borrow, leading home and car sales to cool. Households are using up the last of their pandemic savings and credit card debt has risen 22% since 2022. “We don’t think things are going to fall apart this year, but consumers are going to have to pause and do some hard thinking on how they’re spending their money,” one economist told the Post.

Voters appear unimpressed with President Joe Biden’s economic record: He leads only in Michigan of the seven battleground swing states crucial to the 2024 election, according to a Bloomberg/Morning Consult poll this month. Most voters in those states said they are experiencing worsening economic conditions, with only one in five expecting inflation to cool. “People are really tying Bidenomics and their perception of the economy to the inflation rate,” said Matt Monday of Morning Consult. Biden had been counting on the economy to overtake Trump, but his “hopes of a pre-election rate cut were dealt a blow” by Thursday’s inflation and growth data, the Financial Times wrote.