President Joe Biden says Americans shouldn’t worry about Tuesday’s stock market drop, arguing that things “will be fine” despite continuing reports of higher-than-expected inflation.
“The stock market doesn’t necessarily reflect the state of the economy, as you well know,” Biden told reporters in Delaware. “The economy is still strong. Unemployment is low. The works are finished. Production is good. I think everything will be fine. “
The stock market took a dip earlier in the day after the release of a new CPI report showing inflation remains high, with its sample of home goods and services costing the 8.3% more than the previous year.
The news dropped the S&P 500 by 4.3%, the Dow Jones Industrial Average by 3.9% and the Nasdaq Composite by 5.2%, CBS News reports.
The declines marked the Dow’s worst single day since June 2020.
Major companies like Facebook’s parent company Meta and computer graphics chip maker Nvidia have seen even greater drops in their share price.
“We’re not out of the woods yet,” said Luke Tilley, chief economist at the Wilmington Trust The New York Times. “We can’t even see the edge of the woods from here.”
Employment growth remains good despite high inflation. According to the most recent Labor report from the Department of Labor, unemployment stood at 3.7%, up from 3.5% in July.
“We see workforce participation coming back and that’s a good thing,” said AnnElizabeth Konkel, Indeed’s senior economist. Washington Post. “If we have growing participation but not all people still have jobs, it means unemployment will rise. My guess is that these people who come back will be able to find jobs quickly. “
In August, the US economy added 315,000 jobs, the latest in 20 consecutive months adding more than 200,000 new positions.
Biden celebrated the numbers earlier this month in White House comments.
“The great American work machine continues its comeback,” he said. “American workers went back to work, earning more [in] manufacturing, building an economy from the bottom up and from the center. With today’s news, we have created nearly 10 million new jobs since I took office. “
However, the inflation report suggests that the Federal Reserve’s recent moves to raise interest rates and slow borrowing have not yet had the desired impact.
“Inflation remains hot, financial conditions have seen some improvement and labor markets are moving forward,” said Neil Dutta, head of the US economy at Renaissance Macro, in a research note following the CPI report. “If the goal is to slow things down and create some pain, the Fed is failing by its own standards.”
By the end of the month, the Fed will meet to consider a further rate hike.