Inflation has significantly slowed down, with consumer prices rising at a rate of 2.6% in the second quarter, down from 4.1% in the first quarter and over 7% in the first half of last year. This has eased pressure on the Federal Reserve to continue raising interest rates, leading some forecasters to question whether a recession is as imminent as previously anticipated. This sentiment is supported by Jerome H. Powell, the Fed chair, who stated that the central bank no longer expects a recession to start this year.
Officials at the White House have highlighted this report as evidence that President Biden’s economic policies, including investments in infrastructure and green energy, are yielding positive results. The President’s Council of Economic Advisers emphasized in a blog post that investment in manufacturing facilities has contributed significantly to overall GDP growth, the highest contribution in over four decades.
President Biden himself called the data evidence of “Bidenomics in action.”
Recently, Weiler, a manufacturer of paving and forestry equipment, opened a new 120,000-square-foot building at its headquarters in Knoxville, Iowa. While the company currently utilizes only a quarter of the space, Patrick Weiler, the president and CEO, is confident in the future growth and considers it a logical investment.
Mr. Weiler acknowledges strong demand as the economy recovers from the pandemic. With supply chain disruptions gradually resolving, the company can now meet that demand. Additionally, federal infrastructure spending is expected to help sustain strong sales even in the face of potential slowdown in private demand.
However, some economists believe that consumer spending may decline in the second half of the year, which could dampen the recovery. Savings accumulated during the early stages of the pandemic are depleting, credit card balances are rising, and while unemployment remains low, job and wage growth have slowed.
Blerina Uruci, chief U.S. economist at T. Rowe Price, explains, “All those factors that were supporting consumption are not as robust anymore. It feels like the anticipated hard landing has been postponed rather than canceled.”
