WASHINGTON — In 2016, Vice President Joe Biden warned against efforts to unravel banking regulations that Democrats had fought to implement following the nation's financial crisis, just as the emerging Trump administration was determined to loosen those strict banking rules.
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President Joe Biden speaks about the banking system Monday in the Roosevelt Room of the White House in Washington.
President Joe Biden sought to reassure Americans over the country's banking system Monday, while insisting emergency measures would not be paid for by taxpayers as additional banks came under stress. SVB -- a key lender to startups across the United States since the 1980s -- collapsed after a sudden run on deposits, prompting regulators to seize control Friday.
A sign is displayed Monday at a branch of Signature Bank in New York. Signature is one of two banks that collapsed.
A woman who was part of a line entering Silicon Valley Bank's headquarters pauses for a selfie Monday in Santa Clara, Calif. The federal government intervened Sunday to secure funds for depositors after the bank collapsed.
A look at the US economy's vital signs
INFLATION
Consumer inflation, not much of a problem, on average, since the early 1980s, started picking up in the spring of 2021 as the economy roared out of recession and Americans spent freely again. At first, Fed Chair Jerome Powell and some economists dismissed the resurgent price spikes as likely a temporary problem that would resolve itself once clogged supply chains had returned to normal.
But the supply bottlenecks lasted longer than expected, and so did high inflation. Worse, Russia's invasion of Ukraine a year ago sent energy and food prices rocketing. By June 2022, consumer prices were 9.1% higher than they'd been a year earlier — the hottest year-over-year inflation in more than four decades.
THE OVERALL ECONOMY
File - Traders on the floor at the New York Stock Exchange watch Federal Reserve Chair Jerome Powell's news conference after the Federal Reserve interest rate announcement in New York, Wednesday, Feb. 1, 2023.Â
The flipside of the disquieting inflation news is good news on the state of the economy — or what would be considered good news in normal times. Even burdened by rising borrowing rates, the economy has proved stronger and sturdier than most forecasters had imagined.
"This economy today looks very different from where we thought it was in mid-January,'' said Peter Hooper, an economist at Deutsche Bank. "Before, we thought that things were slowing down, the labor market was softening, wage and price inflation was coming down."
JOBS
The remarkable strength of the American job market has defied expectations throughout the economic tumult of the COVID years. 2021 and 2022 were the two best years for hiring in U.S. government records dating to 1940.
Job creation was expected to slow this year. Not so far. In January, employers added a blistering 517,000 jobs, far surpassing December's 260,000 gain. And the unemployment rate reached 3.4%, its lowest level since 1969.
CONSUMERS
A shopper passes items inside the Walmart Supercenter in North Bergen, N.J., Thursday, Feb. 9, 2023. Americans have continued to shop this year, shrugging off higher interest rates and prices.
Their jobs secure, their bank accounts still bolstered by pandemic-era savings, Americans have continued to spend, shrugging off higher interest rates and prices.
In January, retail sales rose at their fastest pace in nearly two years, rebounding from a tepid holiday shopping season. Even after accounting for inflation, consumers spent their after-tax dollars at the fastest pace since March 2021. Consumer spending on services, ranging from health care to dinners out to airline tickets, last year accounted for 95% of the economy's growth.
HOUSING
The Fed's rate hikes, which so far have had only a limited effect on the overall economy, have walloped one industry: Housing.
Residential real estate depends on the willingness of people to borrow for what's typically the costliest purchase of their lives. As the Fed continually jacked up interest rates last year, the average rate on a 30-year fixed mortgage topped 7% last fall — more than double where it began 2022 — before dropping back slightly.
