Recession fears loom over Biden's 2024 reelection, evoking Jimmy Carter

Retail store closures, layoffs, high energy prices, inflation, rising interest rates and further stock market losses could spell bad news for the president's reelection effort

Published: April 3, 2023 11:18pm

Updated: April 6, 2023 11:26am

A cut in OPEC production. Mass layoffs from Silicon Valley to McDonalds Corp. Bank failures. Customer runs on deposits. Relentless inflation. Rising interest rates for mortgages and other borrowing.

As President Joe Biden mulls running for reelection in 2024, the storm clouds of a U.S. recession continue to form on the horizon and are reminding some of the economic conditions that bedeviled Jimmy Carter four decades ago in his failed bid to win a second White House term.

"Of the seven previous presidents, only Carter had a higher rate of price increases, coming in at 18.1 percent overall," former Newt Gingrich adviser David Winston wrote in a recent Roll Call column that measured Biden's inflation performance against his modern predecessors. "After Carter, every president has had a lower inflation rate at this point, and the last three scored under Biden by more than 10 percent."

The Biden economy's performance has left the president making some difficult arguments during his recent economic victory tour, like crowing about the growth of consumer spending when it is mostly driven by increased inflation costs, according to Alfredo Ortiz, the head of the small business group Job Creators Network.

Biden "goes around saying, 'Yeah, consumer spending is great. It's really great.' And the only reason he can say that is because people are paying more, but they're getting less goods and services," Ortiz told the "Just the News, No Noise" television show last week. "This is not actually a good thing."

And inflation is only one of several measures that have economists spooked.

A recent CNBC survey shows that investors are worried about further stock market losses this year. 

Retail chains such as Bed Bath and Beyond are losing many locations. The McDonalds Corporation is set for a substantial amount of layoffs. Google recently laid off 12,000 employees, and Facebook let go of about 10,000. 

According to the Energy Inflation Administration, "the average nominal retail electricity price paid by U.S. residential electric customers" in 2021 rose at the "fastest rate since 2008, increasing 4.3% from 2020 to 13.72 cents per kilowatthour (kWh)." The agency had also forecasted that the U.S. residential price of electricity will "average 14.9 cents per kilowatthour in 2022, up 8% from 2021." 

According to Consumer Price Increase data, consumers actually paid 14.3% more for electricity in 2022 compared to the year prior. 

The EIA reported that "natural gas consumption, production and exports broke records in 2022 as real average prices hit a 14-year high," according to a report.

Current average mortgages rates are more than double the average from 2022. According to Forbes, average mortgages rates are heading toward a 20-year high.

BlackRock, the largest asset manager in the world, is warning that the Federal Reserve is causing a recession by keeping interest rates high and reducing economic growth.

"Central banks confront the growth-inflation trade-off, with the Federal Reserve seeing recession but no rate cuts. We agree," Wei Li, global chief investment strategist at BlackRock, wrote in a recent report, according to Business Insider. "We don't see rate cuts this year — that's the old playbook when central banks would rush to rescue the economy as recession hit. Now they're causing the recession to fight sticky inflation — and that makes rate cuts unlikely, in our view."

This year, two banks, Silicon Valley Bank and Signature Bank, have collapsed. Former Treasury Secretary Larry Summers has warned that it's "too early" to tell if there will be more.

"When you have a series of earthquake tremors, it's a fairly long time before you should be in a position to be confident that you've seen the last of them," he said on Friday.

Meanwhile, some of the country's largest banks reported a significant run on deposits last week as recent bank failures rattled nerves. A survey found customers at America's top 25 banks withdrew nearly $90 billion from their accounts in the last week of March.

In addition, the nation's unemployment rate ticked up to 3.6% in February, according to the Bureau of Labor Statistics.

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