On its face, the economy seems to be OK again. After an unprecedented glut of spending and a resulting inflation crisis, employment has kept up while investors downgrade their risk of recession.
And yet President Joe Biden's victory laps seem to be celebrating a mere facade — an economy that is fundamentally unwell and flying on fumes.
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So first, the good: The unemployment rate sank to 3.5% at the end of last year, with jobless numbers hitting their lowest number in half a century. After two consecutive quarters of economic contraction (usually deemed a recession under every president except Biden), GDP output rebounded despite the Federal Reserve's most aggressive rate hike campaign in decades. That campaign, in conjunction with quantitative tightening so successful that our money supply has decreased by 2.5% since its apex last March, has brought CPI inflation down from 9.1% in June to 6.5%. Against all odds, the Fed may actually manage to pull off its "soft landing," bringing inflation down to its 2% target without inducing a painful and lasting recession.