Points to watch for in US President Barack Obama’s final State of the Union speech

January 12, 2016 11:00 am

 

delivers his State of the Union address to a joint session of Congress on Capitol Hill. Photo / AP

President Barack Obama delivers his final State of the Union address
tomorrow to a nation whose economy is far sturdier than it was when he
took office in 2009.
Yet as 2016 begins, the stout job market is
accompanied by tepid economic growth and stubbornly flat wages. More
broadly, two things are on the rise, to the President’s dismay: global
temperatures and Americans’ concerns about terrorism.

1. The big picture

Friday’s
December jobs report capped a strong year in which employers added 2.65
million positions. That made last year the second best year since 1999
for job gains, exceeded only in 2014. For a third straight month, the
unemployment rate was 5 per cent. But average hourly pay seems stuck,
sliding one cent last month to $25.24 ($38.67). That left the growth
of average pay at 2.5 per cent last year, below the 3.5 per cent
economists consider healthy. The latest figures show the overall economy
growing at a modest 2 per cent annual rate in last year’s
July-to-September quarter, though analysts expect improvement.

2. The economy, from other angles

For
Wall Street, 2015 was a roller coaster. Record highs followed by an
abrupt swoon prompted by worries about the strong dollar’s impact on
exports, China’s slowing economy and sagging oil prices. By year’s end,
the Dow Jones industrial average had faded by 2.2 per cent, its first
down year since 2008. And it began this year with steep declines fuelled
by continued China worries. Through November, the most recent figure,
inflation grew by 0.4 per cent for the past 12 months. That minuscule
rise was well below the annual 2 per cent increase the Federal Reserve
prefers.

3. Consumer bonuses

Oil prices
slumped to their lowest levels since 2004. That meant bargains at the
pump where prices were down slightly from a year earlier. A typical
household saved US$660 on its gasoline costs compared with 2014, the
federal Energy Information Administration said. Though the Federal
Reserve raised a key interest rate for the first time in seven years,
homebuyers’ mortgage interest rates remained at 3.97 per cent last week,
up slightly from a year earlier but well below the historic 6 per cent
average.

4. Healthcare

The Administration
says that with the sign-up deadline still three weeks away, 11.3 million
people have enrolled for 2016 coverage under Obama’s 2010 healthcare
overhaul, similar to last year’s enrolments. Though that law has helped
decrease the number of uninsured people in the US, progress may have
paused. The Gallup-Healthways Well-Being Index, an independent survey,
says 11.9 per cent of adults remained without coverage as 2015 ended,
about the same number that began the year uninsured. People remain
concerned about rising costs of prescription drugs. Many face
employer-provided coverage with growing premiums, deductibles and other
out-of-pocket costs.

5. Secure, or not?

There
was a growing threat from Isis (Islamic State) and escalating efforts
by the US to combat it; Republicans say the Obama Administration hasn’t
done enough. The November killing of 130 people in Paris and last
month’s shootings in San Bernardino, California, by a radicalised Muslim
couple helped fuel public worries. Polls show growing concerns about
terrorism and allowing Muslims to enter the US. Obama and Democratic
presidential frontrunner Hillary Clinton have criticised Republicans for
what they say is demonising Muslims and thereby helping Isis attract
recruits. There were 9800 US troops in Afghanistan and 3300 in Iraq as
2015 ended, amid continuing violence in both regions.

6. More guns

The
FBI conducted more background checks on gun buyers in December than in
any month since the system began in 1988. It processed over 3.3 million
checks in December and 23.1 million in 2015, its busiest year ever. That
could be in reaction to Paris and San Bernardino. Despite Obama’s
recent executive actions aimed at curbing gun violence, gun
manufacturers’ stocks have risen in value.

7. The heat is on

More
than 200 nations reached agreement last month to try curbing global
warming by restricting the use of fossil fuels, which emit heat-trapping
gases. It was an Obama priority. Yet the National Oceanic and
Atmospheric Administration said last week that 2015 was the second
warmest and third wettest year in 121 years of record-keeping for the
lower 48 states, in part thanks to the El Nino natural warming of the
Pacific Ocean that affects climate worldwide. NOAA expects figures later
this month to show that last year was the hottest ever recorded
globally.

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