President Biden declared he had “cured the economy” last week, a bold statement made just days before global stocks plummeted on Monday. Speaking to reporters outside the White House, Biden suggested that economic recovery would be a key part of his presidential legacy.
“Mr. President, what do you want your legacy for Gen Z to be?” a reporter asked.
“That I cured the economy. And the environment. And a few other small things,” Biden responded, told The New York Post.
This comment quickly became a target of online ridicule on Monday when a global market downturn caused Wall Street’s fear gauge to spike to its highest level in four years. The Cboe Volatility Index, or VIX, which measures investor fear, surged as much as 172% to 62.27 before trading began. This marks the highest level for the index since March 2020, at the onset of the COVID-19 pandemic when it reached 85.47.
The VIX index, based on the price of S&P 500 stock options, gauges expected market volatility. Since the pandemic’s start, the VIX index has remained relatively stable, never closing above 40. However, it began to surge last week following a weaker-than-expected July jobs report, reigniting fears of a recession.
The Labor Department reported that the economy added just 114,000 workers last month, while the unemployment rate jumped to 4.3%, the highest level since October 2021. This report added to growing evidence that the economy is weakening amid high interest rates.
The rise in unemployment triggered the so-called Sahm Rule, an early recession indicator. The rule suggests that a recession is likely when the three-month moving average of the jobless rate is at least a half-percentage point higher than the 12-month low. This slowdown in job growth has raised questions about whether the Federal Reserve waited too long to cut interest rates, which are currently near a 23-year high.
Policymakers decided to hold rates steady during their meeting last week but indicated the possibility of a rate cut in September. With the sharp slowdown in job growth and growing concerns of a recession, more investors are now pricing in the likelihood of a larger, 50-basis point reduction.
As markets continue to react to economic indicators, Biden’s claim of having “cured the economy” faces increased scrutiny. The volatile market conditions and rising unemployment challenge his optimistic outlook, making it a contentious point as his administration navigates these economic hurdles.