Tale of two recoveries

Today's economic data tells the tale of two recoveries. Our jobs recovery remains strong. New unemployement claims remain low, as jobs are created at a record level. The rate of people on unemployment insurance is the lowest since 1970 - more than 50 years. And, private sector job growth is strong, boosted by the steps we took in the American Rescue plan a year ago this week.

At the same time, today’s inflation report is a reminder that Americans‘ budgets are being stretched by price increases and families are starting to feel the impacts of Putin’s price hike. A large contributor to inflation this month was an increase in gas and energy prices as markets reacted to Putin’s aggressive actions. As I have said from the start, there will be costs at home as we impose crippling sanctions in response to Putin’s unprovoked war, but Americans can know this: the costs we are imposing on Putin and his cronies are far more devastating than the costs we are facing.

I know that higher prices impact a family’s budget, which is why I am fighting to bring down the everyday prices that are squeezing Americans. Last week, in coordination with our allies, the U.S. secured a release of 60 million barrels of oil from our strategic reserves. My Administration is pushing for investments so we can manufacture more in America, strengthen our supply chains, and move goods to market at lower cost. I’m promoting competition to make sure big corporations are offering consumers fair prices, and I’m pressing Congress to pass my plan to lower the cost of essentials like prescription drugs and energy.

Finally, I want to be clear: we can do all this, and reduce the huge federal budget deficit that I inherited from my predecessor. Earlier this week, we learned that after reducing the deficit last year — for the first time since 2015 – CBO reported that we are on track to cut the deficit this year by over $1 trillion – the largest one year reduction in the deficit in US history.

President Joe Biden declared on Tuesday night that he was taking that would “blunt gas prices.”

The global oil market disagrees.

The price of Brent crude futures, the global oil benchmark, rose above $110 a barrel in overnight trading. West Texas Intermediate, the U.S. benchmark, rose to more than $109 a barrel.

“Tonight, I can announce that the United States has worked with 30 other countries to release 60 million barrels of oil from reserves around the world. America will lead that effort, releasing 30 Million barrels from our own Strategic Petroleum Reserve. And we stand ready to do more if necessary, unified with our allies,” Biden said in his State of the Union address. “These steps will help blunt gas prices here at home.”

Earlier in the day, the International Energy Agency said its members had agreed to release 60 million barrels of oil from their strategic reserves. But that announcement made little impression in the market. In part, that is because 60 million barrels is the equivalent of about three days of U.S. consumption.

Prices have risen sharply this year, driven up by rising demand and limited supply. Since Russia attacked Ukraine, prices have gone even higher as traders assess the risk that Russian oil could be sanctioned or otherwise excluded from global markets. So far, the U.S. and its allies have not sanctioned Russian energy directly. But on Monday and Tuesday, demand for Russian oil appeared to vanish as some traders decided to avoid purchasing oil from Russi, a move some are calling “self-sanctioning.”

Analysts at Bank of America have said that oil could go as high as $200 a barrel if the Russian supply was completely cut off.

At $110 a barrel, Brent crude is at its highest price since 2013.