Editor’s note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our subscribers each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro. The U.S. has somehow dodged a recession despite a backbreaking sequence of Federal Reserve rate hikes, upheaval at regional banks and a sharp sell-off in the stock market last fall. If President Joe Biden wants credit for avoiding the worst — at least, for now — Americans aren’t giving it to him. A new poll from Gallup this morning found that just 35 percent of all Americans have confidence in Biden’s handling of the economy, down five percentage points from last year. Nearly half have “no confidence” in his abilities when it comes to the economy. Faith in Fed Chair Jerome Powell as well as Democratic and Republican congressional leaders also tumbled below 40 percent — the first time that’s happened since Gallup began polling this question in 2001. “None of these leaders engenders much confidence now,” wrote Gallup’s senior editor Jeffrey Jones. While their marks could improve if the economy stays afloat, they could also erode further if the economy falls into a recession later this year, Jones added. A downturn appears likely as banks curtail loans following the failures of Silicon Valley Bank, Signature Bank and First Republic over the last two months. Shares of other regional banks — whose balance sheets are less reliant on flighty uninsured deposits — have fallen sharply in recent weeks. Those wobbles were bound to effect credit markets, and the latest survey of lending standards by the Fed — which only accounts for activity through the end of March, before First Republic fell — found that banks are tightening their purse strings as demand slackens for new financing. There is still “heavy concern across Wall Street and among many economists that the Fed’s rapid and intense campaign of rate hikes meant to battle inflation will slam the brakes on the economy hard enough to create a recession,” Ben White reported on Monday. Another factor, of course, is the debt limit. Big banks and financiers have been clanging alarms about what would occur if markets lose faith in the government’s ability to pay its debts for months. The so-called X-Date for when that would happen could arrive as soon as early June, the Bipartisan Policy Center reported early this morning. Treasury and the researchers at several big banks have published similar estimates. Biden will meet with House Speaker Kevin McCarthy (R-Calif.), Senate Majority Leader Chuck Schumer (D-N.Y.), Senate Minority Leader Mitch McConnell (R-Ky.) and House Minority Leader Hakeem Jeffries (D-N.Y.) later this afternoon to kick off negotiations. If policymakers don’t broker a deal before the end of the month, each passing day will become a game of “Russian Roulette with the full faith and credit of the United States,” said BPC’s Director of Economic Policy Shai Akabas. “Neither we nor Treasury can know with any certainty when the X-date will arrive, even a couple days in advance,” Akabas told reporters in a briefing Monday. IT’S TUESDAY — What should we be looking out for with debt limit meeting? Send tips, gossip and suggestions to Sam at ssutton@politico.com and Zach at zwarmbrodt@politico.com.
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