Biden touts success on economy as US presidential race heats up

Today’s top stories

• The EU and the US are speeding up attempts to set up a maritime corridor for aid to Gaza from Cyprus, after the US said it would organise a facility off Gaza’s coast to facilitate large ships.

• The US Food and Drug Administration delayed an approval decision on Eli Lilly’s breakthrough Alzheimer’s disease drug, which was expected to be approved this month. Donanemab will now be subject to a further review by an advisory committee of independent experts.

• Instagram overtook TikTok in new app downloads last year, boosted by its attempts to copy its rival’s short-form video format. A powerful US congressional committee has passed a bill that would remove TikTok from app stores unless its Chinese owner divests it.

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Good evening.

And they’re off. US President Joe Biden came out swinging in his final State of the Union address before November’s presidential election at the end of a week in which his would-be nemesis Donald Trump was all-but confirmed as the Republican candidate.

As well as frequent jabs at his predecessor and vowing to fight for “democracy and freedom”, Biden took a triumphant tone on the US economy, describing it as the “envy of the world”.

His message was reinforced today by another set of better than expected jobs numbers. Some 275,000 posts were added in February, although January’s blockbuster figure of 353,000, which had led investors to dial down expectations of early interest rate cuts, was revised downwards to 229,000. December’s total was also cut by 43,000 to 290,000. The unemployment rate rose from 3.7 per cent to 3.9 per cent.

Federal Reserve chair Jay Powell told US senators yesterday that the Fed was “in the right place” in its fight against inflation and was “not far” from having the confidence to start cutting rates. After today’s data and the revisions for previous months, traders are now plumping for that process to begin in June.

Aside from selling his record on creating jobs and an unemployment rate still hovering at a 50-year low, Biden used his State of the Union address to reassure still sceptical voters with pledges to tackle “shrinkflation” — in which companies sell new, smaller versions of products without changing the price — and make housing more affordable.

He also hit out at business and billionaires who would “finally begin to pay their fair share”. The 1,000 richest Americans will be subject to a minimum tax of 25 per cent, raising $500bn over 10 years, while corporations would pay at least 21 per cent in tax.

Biden’s speech came the day after Nikki Haley, Trump’s only surviving rival for the Republican nomination, dropped out of the race after Trump cruised to victory in a string of “Super Tuesday” state primaries, leaving him likely to face off against Biden in a rematch of the last election.

Haley’s exit prompted Republican Senate leader Mitch McConnell to endorse Trump, despite having called him a “despicable human being” after the storming of Capitol Hill three years ago. It also makes it easier for Trump to raise money through the Republican National Committee although he still faces 91 criminal charges and a $454mn civil fraud judgment.

Biden’s feisty performance, says US national editor Edward Luce, should put to bed any notion that he might yet pull out of the presidential race. But whether he can turn round his poor poll ratings in time — the subject of our latest Big Read — is another matter. 

“The bad news is if the election were held today, he’d lose,” said one Democratic strategist. “The good news is that it is not being held for 243 days.”

Sign-up here for our twice-weekly Election Countdown newsletter for the key plot lines and data points in the run-up to an unmissable election.

Need to know: UK and Europe economy

The UK Budget verdicts are in. The Institute for Fiscal Studies and Resolution Foundation think-tanks said pensioners and the wealthy — both traditional Tory supporting groups — were the big losers. FT chief economics commentator Martin Wolf said the chancellor’s giveaways set up fiscal pain for after the election, while the FT editorial board said chancellor Jeremy Hunt was stretching economic reality to make his figures add up. Hunt’s party was left deflated by the lack of buzz.

Better news for Hunt came from Bank of England data showing UK wage expectations falling below 5 per cent in February, raising hopes of interest rate cuts. Albeit now in recession, a stronger than expected UK economy and growing hopes of US rate cuts mean sterling is the only major developed world currency to strengthen against the dollar this year.

England’s charities watchdog hit out at high street lenders for closing the bank accounts of not-for-profit groups without warning, just as they come under severe pressure from falling local government funding and soaring public demand.

The European Central Bank, which held interest rates steady yesterday, signalled a cut in June after lowering its inflation forecast, predicting the 2 per cent target would be hit next year.

The surging price of olive oil has turned it into the most shoplifted item in Spain as the “liquid gold” surpasses ibérico ham in the theft rankings.

Despite huge investments, increasing competition and environmental benefits, rail travel is still slower and more expensive than flying. A Big Read discusses the future of Europe’s trains.

Need to know: Global economy

EU countries are set to back Kristalina Georgieva for a second term as managing director of the IMF, paving the way for her formal nomination at the Spring Meetings in April in Washington.

Rich countries’ borrowing is set to hit a record high $15.8tn this year as they are forced to refinance debt at higher rates, the OECD said, putting a squeeze on many governments’ spending plans. The total overtakes the previous 2020 peak at the height of the coronavirus pandemic.

China’s foreign trade grew faster than expected in the first two months of this year, thanks to electronics, higher exports to emerging markets and a “new paradigm” in the country’s relationship with Russia.

Need to know: business

The US is pushing its allies to tighten restrictions on chipmaking exports to China following technological advances by blacklisted Chinese tech companies Huawei and SMIC.

The EU is probing Apple’s move to kick Fortnite-maker Epic Games from its App Store, heightening tensions between the bloc’s regulators and the iPhone-maker as new rules regulating Big Tech come into effect. West Coast editor Richard Waters says the Digital Markets Act is a test case for how far regulators can dictate design of products and services.

Chinese ecommerce company PDD wants nothing less than to change the way the world shops. Its operations are shrouded in secrecy but its extraordinary growth and the success of its Temu and Pinduoduo apps has made it a big favourite on Wall Street. Our Big Read and new film looks at what’s going on.

Science round-up

February was another record month for global temperatures which continued to trend above the critical benchmark of 1.5C higher than pre-industrial levels. Over the past 12 months they have surpassed the 1850 to 1900 average by 1.56C.

The UN’s top environmental agency chief warned that a rush into experiments on cooling the atmosphere by partially blocking the sun risked harming wildlife, oceans, the ozone layer and crops after a failure by governments to agree on how to control geoengineering.

Organoids — miniature human organs — have been grown for the first time from late-stage foetuses in a breakthrough that could make it easier to monitor and treat congenital conditions before birth.

Concerns over “forever chemicals” — perfluoroalkyl and polyfluoroalkyl substances, or PFAS — have snowballed recently. Companies and consumers, who covet miracle products without understanding their true price, need to adjust their thinking, writes Anjana Ahuja.

Some good news

Some welcome news to mark International Women’s Day. Nearly $600mn in new funding from governments, donors and multilateral institutions could help stamp out cervical cancer — a disease that kills a woman somewhere in the world every two minutes.

Source: Economy - ft.com