On The Money — Will Biden get credit for the jobs boom?

President Biden is set to tout surprisingly strong jobs data, but most Americans are still down on the U.S. economy. We’ll also look at how the jobs report may send interest rates higher, Democrats’ response to McCarthy’s spending cut demands, and more.   

But first, check out The Hill’s live blog for the State of the Union address. 

Welcome to On The Money, your guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Subscribe here.

Biden wants credit for a strong economy. Americans aren’t buying it.

Americans remain pessimistic about the economy despite huge job growth and cooling inflation.  

A slew of recent polls reveal that Americans are still struggling with high costs and aren’t convinced that the U.S. can stave off a recession as the Federal Reserve takes steps to slow the economy down.   

• Just 37 percent of respondents in a recent Washington Post-ABC News poll said they approve of the economy. That’s unchanged from February 2022.
  
• A CBS News-YouGov poll released Sunday found that one-third of Americans believe the state of the economy is “good,” while 61 percent say it’s “bad.”
  
• That’s an improvement from the previous week, when just 28 percent said the economy is good, but lags historical figures.   

Polling data shows that Americans aren’t impressed by slowing inflation, or in some cases aren’t noticing it at all. 

A survey from Gallup found that two-thirds expect inflation to rise, not fall, in the first half of 2023. That’s down from 79 percent last year, when inflation was raging.   

Karl digs in here. 

ON THE RISE

Here’s why the strong January jobs report will push interest rates higher 

The Federal Reserve is on track to extend its aggressive rate hike campaign and put more pressure on the U.S. economy after a stunning January jobs report, top officials said this week. 

Federal Reserve Chairman Jerome Powell said Tuesday that the Fed has a “significant road ahead” to bring inflation down to the bank’s 2 percent annual target after the U.S. added a whopping 517,000 jobs in January and pushed the jobless rate down to 3.4 percent, the lowest level since 1969.

• “There’s been an expectation that it will go away quickly and painlessly, and I don’t think that’s guaranteed,” Powell said of high inflation Tuesday during an event at the Economic Club of Washington, D.C.
  
• “The base case for me is that it will take some time, and we’ll have to do more rate increases. And then we’ll have to look around and see whether we’ve done enough,” he said.
  
• The consumer price index has fallen steadily over the past six months to 6.5 percent annually, and the personal consumption expenditures price index, which is the Fed’s preferred measure of inflation, has fallen to 5 percent annually. 

But the underlying strength of the economy as shown in the January jobs report could be a problem for the Fed, which has been expecting to see more people losing their jobs as it increases borrowing costs.

The Hill’s Tobias Burns explains why.

‘SUCH HYPOCRITES’

Democrats bash McCarthy over spending demands in debt ceiling talks 

House Democrats are slamming Speaker Kevin McCarthy (R-Calif.) this week after he demanded steep spending cuts as part of negotiations with President Biden to lift the debt limit. 

They’re pointing to the trillions of dollars piled onto the debt under Republican administrations, wondering aloud why GOP leaders didn’t prioritize cuts when they had the power to do so. 

• The government has already hit the $31.4 trillion debt limit, and the Treasury Department has warned that the “extraordinary measures” it is using to stave off a default will exhaust themselves over the summer.
  
• The vote was once routine, but Republicans more recently have used it as leverage to fight for reductions in federal spending — and McCarthy said Monday it was an appropriate arena for that debate. 

The Hill’s Mike Lillis breaks it down here. 

UNDER SCRUTINY

Congress kicks off probes into airline meltdowns  

Congress is digging into the air travel mess following high-profile meltdowns at the Federal Aviation Administration (FAA) and Southwest Airlines.   

Lawmakers on Tuesday held their first hearing on aviation safety since last month’s FAA system outage that forced the U.S. to ground all flights.  

They’re concerned that the U.S. could be on the verge of tarnishing its stellar track record of aviation safety, pointing to multiple near-crashes in recent months.  

“Right now the alarm bells should be going off across the aviation industry,” said Rep. Garret Graves (R-La.), chairman of the aviation subcommittee. “Our systems are stretched and stressed. Demand is projected to go nowhere but up.”  

Karl has more here. 

Good to Know

More than two-thirds of small-businesses owners said in a Goldman Sachs survey that the federal government is failing to meet their needs.

Small Business Administrator Isabella Guzman also warned on Tuesday that minority-owned small businesses’ lack of access to capital is costing the U.S. economy hundreds of billions of dollars in economic output. 

Other items we're keeping an eye on: 

• A California law barring new oil drilling in residential areas and school zones will be put directly to voters next November following a campaign by a state oil trade group.
  
• More than 40 Republican senators have filed an amicus brief to the Supreme Court arguing against Biden’s student loan relief plan.  
  
  

That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow.