Biden is looking to stay in the White House in the upcoming US presidential election, set to be held on Nov 5. His predecessor Donald Trump is also running for re-election.
Such a robust financial environment would historically help to carry an incumbent US president to a second term in office, but this does not seem to be the case now.
“THEY THINK THAT IS A HIGHER PRICE”
Harvard University economics lecturer Judd Cramer said that “vibecession” is the idea that the economy is doing quite well, but the vibes – or what the people are feeling – are “not where we think they should be”.
The economist, who co-wrote in a paper in February analysing why this could be happening, told CNA: “The measures that we traditionally use to describe whether we’re in a recession or an expansion, those are all in great shape.
“Unemployment is low, inflation is declining. GDP (gross domestic product) growth has been doing well.
“We would have expected that given those things, consumer sentiment would also be rising. But we haven’t seen that to be the case at all.”
Cramer noted that this could be partly due to elevated interest rates, which have in turn caused mortgage and credit repayments to go up.
However, mortgage payments and interest costs are not included in official measures of inflation.
“They think that that is a higher price in the economy, and they experience that as more inflation,” Cramer added.
The Federal Reserve began hiking rates in March 2022 and has raised them 11 times since then. Currently, rates are at their highest levels in two decades at 5.25 to 5.50 per cent.
From: channelnewsasia
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