Stimulus Update: Biden Doubles Down on Economic Progress in State of the Union Speech

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The president is pleased with the state of the economy. That’s not a great thing from a stimulus perspective. 

For well over a year now, many American consumers have been struggling financially. And we can blame inflation for that.

But despite higher living costs, and despite the string of recession warnings that filled the media during the latter part of 2022, the reality is that the U.S. economy is in pretty solid shape these days. And that’s a good thing — except from a stimulus perspective.

Biden is pleased with the economy’s progress

The arrival of the pandemic battered the U.S. economy in 2020. It caused a widespread uptick in unemployment and forced many Americans to deplete their savings and rack up scores of debt just to stay afloat.

Lawmakers were quick to respond with stimulus aid, and it helped. But over the past year, many people have called for follow-up aid to help cope with inflation. And the federal government hasn’t heeded that call.

But that’s understandable. It’s easy for lawmakers to justify stimulus policies when the economy is in shambles. But that hasn’t been the case for quite some time, and as a result, it’s unlikely that stimulus checks will start hitting Americans’ bank accounts anytime soon.

In fact, President Joe Biden addressed the nation in his State of the Union speech on Feb. 7, and he said himself, “Two years ago our economy was reeling. As I stand here tonight, we have created a record 12 million new jobs — more jobs created in two years than any president has ever created in four years.”

Not only have many jobs already been recovered since the pandemic, but we could see even more jobs come back or get created in the near term. In January, the U.S. economy added a whopping 517,000 jobs, and the national unemployment rate fell to 3.4%. If this pattern continues, we can pretty much write off stimulus checks for 2023. But we also shouldn’t need them.

Inflation is cooling, too

While job growth is a very positive thing, it doesn’t actually address the issue of inflation. But we’ve seen some improvements there, too.

The rate of inflation has been slowing month after month since peaking in mid-2022. If that trend continues, then consumers might see their living costs drop a notable degree before the end of the year.

Of course, there’s still the nagging question about whether a recession will hit in 2023. Last year, many experts seemed convinced that the economy would crumble on the heels of persistent interest rate hikes on the part of the Federal Reserve.

The Fed, however, has slowed down on rate hikes this year. Its first rate hike of 2023 was far less aggressive than the rate hikes we saw for most of 2022.

And all told, recent jobs and economic data makes a 2023 downturn less likely. That also means a stimulus round is most likely not going to happen this year. But we’re better off with a strong economy than a weak one that deteriorates to the point where lawmakers have to step in with aid.

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