(Reuters) – 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, said Jared Bernstein, chair of the White House Council of Economic Advisers yesterday.
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 in a good start for the new year,” Bernstein said. U.S. 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 noted 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 Labor Department’s Consumer Price Index began the year with annual price increases averaging 6.4%. By November, that was down to 3.1%. Bernstein noted that gasoline was below $3 a gallon in more than half the states.
The U.S. national average retail gasoline price could drop by 13 cents next year to $3.38 a gallon, 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%, with overall retail spending rising 3%.
Despite the growing optimism, the Biden administration says 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 MAERSKb.CO, one of the world’s major cargo shippers, on Sunday said 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 color, which he said reflected more optimism and confidence about the U.S. 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 color would also help offset the increases, he said.
