Three recent warning signs about the state of the U.S. economy may be cause for concern for President Joe Biden and the Democrats as the president continues his re-election bid.

The White House reacted furiously to a decision by ratings agency Fitch to downgrade the U.S. credit rating this week and blamed the move on the previous administration.

That downgrade was followed by a poorer than expected July jobs report and news that the average price of a gallon of gas has risen 30 cents over the past month, hitting Americans at the pumps.

The U.S. economy is always a key issue in presidential elections. The Biden team has been touting so-called “Bidenomics”—the president’s economic plan—and there has been a significant reduction in the annualized rate of inflation, which was 3 percent in June.

That’s down from 9 percent in June 2022 and approaching the Federal Reserve’s target of a 2 percent annualized rate.

U.S. President Joe Biden gives remarks on Artificial Intelligence in the Roosevelt Room at the White House on July 21, 2023 in Washington, DC. The White House is reportedly watching gas prices “very closely.”
Anna Moneymaker/Getty Images

Nonetheless, this week’s economic news could spook the White House as Biden begins his campaign.

Newsweek has reached out to the White House via email for comment.

Here’s a closer look at three warning signs for the U.S. economy.

The Credit Downgrade

Fitch, one of the three major ratings agencies that assess the creditworthiness of governments and companies, announced on Tuesday that it was downgrading its credit rating for the U.S. from the highest rating AAA, down one notch to AA+.

While AA+ is still considered a very positive indicator of a country’s creditworthiness, Biden administration officials reacted with apparent anger to the decision.

Treasury Secretary Janet Yellen issued a statement calling Fitch’s move “arbitrary and based on outdated data.”

“Fitch’s quantitative ratings model declined markedly between 2018 and 2020—and yet Fitch is announcing its change now, despite the progress that we see in many of the indicators that Fitch relies on for its decision,” she said.

One senior administration official told reporters: “This is a bizarre and baseless decision for Fitch to make now,” Reuters reported.

Nonetheless, Maya MacGuineas, president of the non-partisan Committee for a Responsible Federal Budget, said the downgrade “should be a wake-up call.”

“Whether one agrees with Fitch’s decision to downgrade the United States government or not, we are clearly on an unsustainable fiscal path. We need to do better,” MacGuineas said.

A Cooling Jobs Market

The July jobs report released on Friday showed that nonfarm payrolls expanded at a slower rate than had been expected. The U.S. economy added 187,000 nonfarm payroll jobs in July—less than Dow Jones’ 200,000 estimate.

The jobs report may indicate a slowing in the U.S. economy, though the jobs added were an increase on June, when just 185,000 nonfarm payrolls jobs were added.

July saw the weakest monthly gains in nonfarm payroll jobs since December 2020. It was also the first jobs report since the Fed raised interest rates to a 22-year high and it remains to be seen what long-term impact that could have on employment figures.

The unemployment rate in July was 3.5 percent with 5.8 million people unemployed.

Biden welcomed the jobs report in a statement on Friday.

“Unemployment near a record low and the share of working age Americans who have jobs at a 20-year high: that’s Bidenomics,” the statement said.

“Our economy added 187,000 jobs last month, and we’ve added 13.4 million jobs since I took office—more jobs added in two and a half years than during any president’s four-year term,” he said.

“The unemployment rate is 3.5 percent, marking a full year and half below 4 percent. This follows recent news that our economy continues to grow, while inflation has fallen by nearly two thirds and is at its lowest level in more than two years. We’re growing the economy from the middle out and bottom up, lowering costs for hardworking families, and making smart investments in America,” the statement concluded.

Rising Gas Prices

The average price of a gallon of gas has risen 30 cents over the past month amid outages at some U.S. refineries caused in part by intense heat.

According to the American Automobile Association (AAA), the average price of a gallon of gas was $3.83 on August 5—that’s up from an average of $3.52 a month ago.

That’s still lower than the average price of a gallon of gas a year ago, which was $4.11, but a price hike at the gas pump won’t go unnoticed by American consumers.

The rise in price is linked to unplanned outages at at least four fuel-making plants in Texas and Louisiana. Those outages have been caused in part by extreme heat.

Those two states have half of the refining capacity in the U.S.

A spokesperson for the American Fuel and Petrochemical Manufacturers (AFPM) trade group told Politico in a statement on Thursday that some refineries in the U.S. had experienced outages due to weather as well as unexpected maintenance after “extended periods of high utilization.”

“For facilities that do experience high heat, many have cooling systems in place to help them address heat-related operational challenges and keep workers safe,” the spokesperson said.

CNN reported last week that the White House was watching gas prices “very carefully,” citing an unnamed senior administration official.

“The irony is the strength of the economy brings higher prices,” the official said. “The better the president (and his agenda) performs, the higher the price is going to go.”