Seven months into his presidency, President Joe Biden has reason to smile about the direction of the economy. While still plagued with many problems, the nation’s economy is certainly a far cry from the dire predictions from President Donald Trump during last year’s presidential campaign.“If he (Biden) gets in, you will have a depression the likes of which you’ve never seen. it’ll be a very, very sad day for this country,” Trumpprophesized.
That campaign forecast of gloom and doom is simply not happening. Some like the International Monetary Fund even predict that 2021 will be the best year for the US economy since 1984. The facts are that the U.S. economy is expanding, at least at an annual rate of 6 percent. More than 1.3 million jobs have been added since the election, a far cry from a depression factor.
The challenge that lies ahead for the Biden administration is to get the economy back to sure footing following the pandemic. The recent surge of the Delta Variant has not helped and while some progress has been made in mitigating the pandemic due to the vaccinations, the ultimate course of the virus is still uncertain. In some respects, the variant has caused a setback to the economy. Many corporations have now delayed fully reopening and masks are making a return in the workplace a sign that the dangers of the Covid-19 pandemic are not over.
Trump’s litmus test of the economy was the stock market. At rally after rally, he boasted that his policies had given the stock market an unprecedented boost. Despite Republicanprojections of a steep decline for the market, the Dow Jones had actually soared by double digits since the Biden election. Trump’s projection that 401-K’s would be doomed under Biden also proved false. People’s retirement funds have actually increased.
Many American families would like to see yet another windfall, after Biden’s $1.9 trillion American Rescue Plan passed. Republicans say the plan was flawed since money was earmarked for households earning as much as $150,000 annually. A Gallup poll last month found that 63 percent of Americans backed the Biden plan.So, Trump was arguably wrong on the Stock Market and the bleak prospects of a depression butgive credit where it is due since he did presideover the lowest unemployment rate in half a century, along with 12 consecutive quarters of growth.
So where are we? If there was a presidential debate tomorrow, someone might ask: “Are you better off than you were the same time last year?” The answer is unequivocally a yes. Business is slowly reopening, workers are returning to their jobs, and the economy is expected to post impressive growth for the rest of this year. Trump can claim some of the credit. He was behind the bipartisan efforts last year to provide $3.4 trillion in coronavirus relief. He will tell you that his assistance was most timely since it helped American families when they needed it most.
To some it seems that Biden is simply following the Trump model in any case. Like Trump he was also behind another Stimulus package. He too is pushing for the economy to reopen and to contain the pandemic. Biden’s $1.9 trillion American Rescue Plan has just begun feeding money into the economy. Its benefits are expected to become increasingly apparent over the remainder of the year.
But despite all the talk about a return to normalcy, many aspects of the economy are nowhere near pre-Covid levels. In fact, there are increased signs that inflation may be rearing its ugly head, depriving many young Americans of the benefits of the government assistance. Trump can rightfully say that his policies helped contain inflation. Changed work habits are also creating havoc in many segments of the economy. Some companies simply cannot get their workers to return behind the desk as working remotely has become a popular alternative. Manhattan offices are still at a fraction of pre-Covid levels.
Americans for the first time face unprecedented shortages, ranging from items that are produced in the USA to those that are imported from overseas. The domestically produced items that are in short supply are largely due to significant gaps in the labor force, unprecedented absenteeism due to Covid, and shortages of ingredient items and components that are used in the manufacturing process. Many of the goods are delayed at sea or in production overseas.
The shortage of goods has also resulted in spiked prices in many cases. Shortages have a snowball effect as was demonstrated when there were shortages in lumber and glass. Not only did these shortages result in higher construction and renovation costs, but theysignificantly impeded timetables. The Cross family in Michigan was hoping to move in right before the opening of the school year. They had specifically scouted out the schools in the community and registered their children in schools they were comfortable with. Yet, they are now being told that their house will not be ready until at least mid-November, creating havoc for Mrs. Cross in a job she found, and of course the children’s schooling.
The dearth of laborers is having a major impact on some industries. The restaurant industry, for example, is having a hard time finding waiters and kitchen staff. Some restaurantsare even cutting back on reservations. You can walk through many commercial strips nowadays and find posted signs of “Help Wanted!”
It is fair to say that the economy is struggling to get back to full strength. The hope is that the President and the Fed do not impede progress any further with policies that retard economic growth. Some economists are not prepared to sign the Biden report card as yet given the circumstances. Most believe that the trajectoryof Covid will determine the pace of the economic recovery. They argue that once people gain confidence that the worst is behind them the economy will burn on all cylinders.
While Trump may have been right not to trust Biden with the economy, the proof thus far is that the President is simply proceeding on the same track as his predecessor. Even better, the economy seems to have its own engine and looks as if it is at full throttle ahead.