Biden’s economic performance record touts a fragile advantage

Biden’s economic performance record touts a fragile advantage

WASHINGTON, Nov 9 (Reuters) – We have 362 days until the US presidential election scheduled for 2024. If political strategist James Carville is right when he says, “It’s the economy, stupid,” the next few months could lead to… Make or break Joe Biden’s economic record. This, in turn, will shape his chances of winning re-election.

Although the White House has touted the merits of the “pedium economy,” voters are not convinced. More than 50% of households disapprove of the president’s handling of the economy, according to an October Economist-YouGov poll. With Americans declaring the economy the most important issue for 112 weeks in a row, according to Reuters and Ipsos polls, Breakingviews compiled a virtual scorecard using 10 economic categories to measure whether Biden’s record tips the scales in his favor or in favor of his Republican rival in the 2024 election. Under current circumstances, the current ruler of the free world is promoting a fragile advantage.

1. The American Rescue Plan Act

The president’s first major legislation was passed in March 2021, pumping $1.9 trillion in stimulus into the U.S. economy. They included financial safety nets such as $1,400 payments to families earning up to $75,000, expanding unemployment benefits, and expanding the child tax credit.

Collectively, this has reduced overall poverty by 44%, according to the Brookings Institution, and raised Americans’ financial health to new heights. Household disposable income adjusted for inflation reached a record $20 trillion in the month Biden’s measure was approved, according to the Bureau of Economic Analysis. Retailers from Walmart (WMT.N) to Nordstrom (JWN.N) credited the aid package with the demand rebound.

As the benefits of spending declined, Americans’ positive view of Biden’s leadership also declined. However, it is part of his record that he can claim when the debates come around.

Verdict: Biden wins

2. Infrastructure Investment and Jobs Act

Biden’s $1 trillion plan was the next major spending package to win Congressional approval in November 2021. It fulfilled the president’s campaign promise to renovate the nation’s roads and bridges, while expanding access to clean water and broadband internet. It will support an additional 600,000 new jobs by the end of next year and 800,000 jobs in 2025, according to Moody’s Analytics.

The bill raises exemptions for a number of US companies, including tractor maker Deere (DE.N) and construction equipment giant Caterpillar (CAT.N). More importantly, it could not have passed without the help of 19 Republicans in the Senate and 13 in the House, many of whom had sought to pass the infrastructure plan under Biden’s predecessor, Donald Trump. The rare bipartisan win gives Biden unique flexibility.

Verdict: Biden wins

3. Chip law

Passage of the so-called “chips and science” plan allowed Biden to consolidate his industrial policy legacy and fulfill a bipartisan desire to rely less on China’s semiconductor industry. The Commerce Department said last month that more than 460 companies have expressed interest in $53 billion in research and production subsidies. The relationship between public and private investment is something worth bragging about. Micron Technology’s (MU.O) $100 billion spending for a New York chip factory is expected to create nearly 50,000 jobs in the state. Intel’s (INTC.O) $20 billion expansion in Arizona is expected to support 3,000 new jobs.

Republicans, including Senate Leader Mitch McConnell, also played a crucial role in getting the bill passed, so both parties will likely tout their support on the campaign trail. But the value of demonstrating successful bipartisanship will accrue to Biden.

Verdict: Biden wins

4. The law of limiting inflation

The president’s most recent major spending bills are ones that have no Republican support. It gave Biden a chance to revive progressive proposals before the 2022 midterm elections. Although the final plan was scaled back from $1.8 trillion to $430 billion in new spending, it still included Biden’s plans for clean energy tax credits and negotiating Medicare drug prices. Medical. Bank of America estimates that it has already stimulated $132 billion in investments across more than 270 new clean energy projects.

Predominantly Republican-voting states also win some of the biggest bonuses. Texas has been allocated $67 billion for clean energy production. West Virginia, the state most reliant on coal for its energy, has approved nearly $400 million for clean wind, solar and battery projects. This makes it difficult for Republicans to criticize the bill.

Verdict: Biden wins

5. Labor market

Americans between the ages of 25 and 54 are working at the highest rate in two decades, and Biden considers himself “the most pro-union president” in US history. The title will likely pay off. Two-thirds of Americans approve of unions, according to Gallup, representing the greatest popularity since the height of the labor movement in the 1960s.

However, the rosy record may deteriorate in the next 12 months. Job creation has slowed broadly over the past year as higher borrowing costs have prompted companies to slow growth plans. The Federal Reserve expects the unemployment rate to rise to 4.1% from 3.8% next year, indicating that about 500,000 people could lose their jobs. The president’s pro-union stance may also backfire. The 40-day United Auto Workers strike likely dampened the economy’s growth, according to consulting firm RSM.

However, Biden is still ahead in jobs for now.

Verdict: Biden wins

6. Housing

The president has taken some measures to support the supply of American homes, from increasing investment in manufactured homes to reducing barriers to residential zoning. But while the administration says its measures have helped build “tens of thousands of affordable housing units,” the country still has a shortage of about 6.5 million homes, Realtor.com said in a March report.

Republicans in Congress haven’t taken much action either. Several legislative proposals, such as allowing homes to be built on federally owned land, have not moved forward. At the same time, mortgage rates reached their highest levels since 2000, and home construction declined.

Verdict: It’s a draw

7. Inflation

All this federal spending has sent prices soaring. Rapid inflation is probably the biggest reason why households feel pessimistic about the economy. The Federal Reserve has been forced to raise interest rates at a historic pace to try to combat inflation.

Although inflation fell to an annual rate of 3.7% in September from a peak of 9% in June 2022, the recovery is not over yet. The financial pain caused by rising prices, and any subsequent economic slowdown caused by higher interest rates, will leave its mark on voters.

Verdict: Biden loses

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8. Student loans

Forgiving large amounts of student debt was one of Biden’s campaign promises, but his efforts have so far failed. The Supreme Court in June blocked the president’s plan to erase $430 billion in student debt through an executive order, angering 26 million borrowers who had applied for relief. The president has eliminated about $127 billion in debt through smaller actions, largely by modernizing federal aid programs. However, this pales in comparison to the $1.8 trillion in outstanding student loans.

Verdict: Biden loses

9. Wall Street

The S&P 500 (.SPX) is up 8% so far in Biden’s first term. This may seem like a decent performance given high inflation and high interest rates. But the group of leading US stocks has been returning an average of 10% each year since it grew to include the 500 companies in 1957. The benchmark index is also down about 10% from its peak under Biden in January 2022.

The picture in the bond market is worse. US Treasuries are bracing for their worst defeat in three years since the country declared independence in 1776. Concerns about ballooning government debt, rising interest costs and dysfunction in Congress have pushed yields to their highest levels in 16 years. Overall, investors have a lot to complain about.

Verdict: Biden loses

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10. Deficit and debt costs

Biden’s victories in the areas of stimulus, infrastructure, and clean energy came at a heavy price. The federal government’s debt pile increased by more than $5 trillion during the president’s first term. Debt was historically high at 119% of GDP at the end of 2022.

While Biden imposed some new taxes, such as fees on stock buybacks, to shrink the budget deficit, each of the president’s three years in office has seen deficits at least 40% larger than before the pandemic. With rising interest rates making debt service more expensive, Biden’s spending could come back to bite him on Election Day.

Verdict: Biden loses

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Twelve months can be an eternity in economics. Housing and jobs give Biden the best chance of beating his Republican opponent. However, inflation, tense markets, high interest rates, and high government spending still bring a great deal of uncertainty to the campaign trail. Our economic track record gives Biden a slight lead. But now he is in a race against time.

He follows @Ben where are you? On X

(The author is a columnist for Reuters Breaking Views. The opinions expressed are his own.)

Context news

US President Joe Biden has touted the benefits of the “pedium economy” throughout 2023 as he prepares for his re-election campaign. The president’s first term saw unemployment fall to a historic low of 3.4% while inflation steadily declined.

Conservative opponents, including former President and 2024 front-runner Donald Trump, have criticized Biden’s messaging and blamed his spending packages for the peak of 9% inflation in June 2022.

Editing by Lauren Silva Laughlin, Sharon Lam, and Aditya Sriwatsav

Our Standards: The Thomson Reuters Trust Principles.

The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed, under the Trust Principles, to integrity, independence and freedom from bias.

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