The economy that does not want to crash The labor market showed small growth in the third quarter

A majority of economists have been predicting a recession for more than a year. Media like Fox News pushes the risk of inflation to the point of stupidity and paints the economic situation in the darkest colors. But even the conservative business newspaper ‘Wall Street Journal’ describes the current state of the American economy as follows:

No recession: In the third quarter of this year, U.S. gross domestic product (GDP) grew by about five percent, a figure that forecasters never expected even in their wildest dreams. Month after month, growth figures on the job front are reported, which are well above expectations.

The central bank, the Fed, is doing everything it can to cool the economy and has already raised the policy rate eleven times to 5.5 percent since March 2022. Vain. The US economy acts like a boxer, taking blows without complaint, marching on fearlessly and making economists look old. “We need to be modest,” Kathy Bostjanic, chief economist at the Nationwide Building Society, told the Financial Times.

Not even the war in Ukraine and events in the Middle East can slow down the American economy. Although the record growth in the third quarter cannot be maintained, it is now considered very unlikely that there will be a risk of a crash in the near term. Treasury Secretary Janet Yellen recently said she sees “no signs of a recession.” Fed President Jay Powell also offers the prospect of a “soft landing,” a desired and controlled cooling of GDP growth and inflation.

Joe Biden’s economic plan seems to be working, “Bidenomics” is working. The president prevented the pandemic from crashing with a generous stimulus program. This has led to inflation that is higher and more persistent than expected. But now the calculation is paying off. Wages are now rising faster than inflation, expressed in figures: The average wage increase is currently 4.2 percent, inflation is 3.7 percent.

Biden’s Green New Deal may have been more modest than planned, but it still has an impact. Not only are many new jobs being created in the United States, they are also being created in sectors for workers without college degrees and in areas particularly hard hit by deindustrialization. In the desert of the Midwestern ‘Rust Belt’, in states such as Ohio, Pennsylvania and Michigan, new life is blossoming.

Biden also gambled and won when it came to unions. He was the first president ever to appear on the picket lines of the United Auto Workers (UAW). Now this strike will be a success for the workers. The UAW has already reached a tentative agreement with Ford and Stellantis (formerly Chrysler, Fiat, Peugeot, Citroen and Opel), and another agreement with GM is likely to follow.

The union members were able to achieve much more than they initially thought. UAW President Shawn Fain also cheered: “We told Ford they had to pay, and they did. We have achieved things that no one thought possible.”

The success for the unions is also a success for Biden. And this success will likely spread to other industries. In Hollywood, for example, screenwriters have already negotiated a better collective labor agreement and a deal with the actors is in the offing. Even traditionally anti-union companies like Starbucks, McDonald’s and Amazon are under increasing pressure to recognize worker organizations.

Harley Shalken, professor emeritus at the University of California, Berkley, told the New York Times, “The unions are certainly not as influential as they were 30 years ago, but they are rebuilding their power.”

Binomics will change the character of the American economy. “The cheap era is over,” writes influential business journalist Rana Foroohar in an op-ed in the Washington Post. This means: The time of cheap money, cheap energy and cheap wages is coming to an end.

This is good news for the American middle class. “The end of the cheap era means a huge change,” says Foroohar. “This means that in the future Main Street and not Wall Street will drive the economy again. This will in turn make the economy more balanced and resilient.”