After political spin surrounded Biden visit, here are basic facts about how the economy's doing

 

MILWAUKEE (CBS 58) -- While politicians are always trying to plant their talking points about the economy in voters' heads, Kristina Puotkalyte-Gurgel was more concerned Thursday with the weeds she was pulling along the side of her house.

Puotkalyte-Gurgel, a mother of three in Milwaukee's Harambee neighborhood, noted the primary economic impact she's feeling is the higher cost of goods.

At the same time, she noted her family is still able to access and afford essential items, something the native of Lithuania said she'll never take for granted.

"It's hard to say [how the economy is doing]," Puotkalyte-Gurgel said. "Groceries are getting expensive, but at the same time, there's so many coupons and sales. So, I don't know. It just kind of equals out."

When President Joe Biden visited Milwaukee Tuesday to tout 'Bidenomics,' he focused on a low national unemployment rate and tied economic growth to federally funded infrastructure projects.

According to data compiled by the Federal Reserve Bank of St. Louis, the federal unemployment rate has fallen to 3.5%, bringing it in line with pre-pandemic levels.

Rebecca Neumann, an economics professor at UW-Milwaukee, noted Thursday the current unemployment rate is almost historically low. Since 1950, only periods in the early '50s and late '60s recorded lower unemployment rates.

Neumann said she also tracks the country's Gross Domestic Product, or GDP, as well as the rate of inflation when evaluating the economy's condition.

She was encouraged by four consecutive quarters of GDP growth after the GDP shrank during the first two quarters of 2022. By several macroeconomic measures, two straight quarters of negative GDP growth amounts to a recession.

"There's been talk about recession, but so far this year, we haven't seen any recession," Neumann said.

Neumann said inflation was more of a mixed bag. This week, Biden touted the rate of inflation slowing down while Republicans hammered the administration over the high prices and interest rates families are still seeing.

The rate of inflation for all urban consumers is 3.1%, which is higher than the sweet spot of 2%, but it's considerably better than last year's inflation, which was three times higher last June.

The price spikes caused by that inflation remain in place.

"I think that's a good point to make, that the prices haven't come back down," Neumann said. "So, we're talking about bringing the inflation rate back to 2%, but that does mean we're still at higher prices."

At the same time, average hourly earnings have continued to rise, which Neumann noted will offset inflation for lots of workers. A key disparity, though, is wages for low-paying jobs are not growing fast enough to keep up with inflation.

Looking ahead, Neumann said one thing giving her concern is the rapid growth of total public debt, which is now at $31.5 trillion compared to $23.2 trillion at the onset of the COVID-19 pandemic.

Did spending cause inflation? It's complicated

One constant criticism leveled at Biden is that his administration spent too much, too fast in an effort to hasten the recovery from the pandemic.

While in Milwaukee, Biden pointed traditional infrastructure projects that have been funded under his watch. The president highlighted the $80 million replacement of the bridge carrying I-90 over the Wisconsin River in Columbia County. He also noted the ongoing rehabilitation of the Holton Street bridge in Milwaukee.

While the $1.2 trillion Bipartisan Infrastructure Law had support from some Republicans -- no Congressional Republican from Wisconsin voted for it -- the $750 billion Inflation Reduction Act passed along party lines.

Neumann said the question of how much government spending influences inflation is a "huge debate" in the world of macroeconomics.

"There's not a real clear answer on that," she said. "And you can find politicians on either side, you can also find economists on either side that say too much government spending is bad for the economy, or it can help jumpstart the economy."

While charts and graphs are important for providing a big-picture perspective and valuable context, the health of the economy can also vary from one family to the next.

Puotkalyte-Gurgel said her personal measuring system is simple.

"I can still get all the groceries I need," she said. "I can still get clothing and shoes for my kids."

Families that cannot comfortably afford those essentials will view the economy differently, of course. Neumann said the best way the federal government can try to ensure the economy raises all boats is to be more cooperative and less combative.

"The economics are kind of on the right track at the moment," she said. "What can derail that is too much fighting from the political parties."