In an editorial by Jennifer Rubin of The Washington Post called “Opinion: Biden gets an early Christmas gift: Good economic news,” she discusses the good economic news hearing into 2022. In excerpts below, she cites The Wall Street Journal and The Conference Board to support her claim.
“Presidents have some control over fiscal policy, but markets, the Federal Reserve and, yes, the state of the pandemic have a lot more say on how the economy is performing. Nevertheless, if President Biden can be bashed for bad economic news during his presidency (e.g., inflation), then he also should get some credit for successes. And right now, there is plenty for him to crow about.
Heading into the new year, the economy looks in better shape than Biden’s legislative agenda. The Wall Street Journal reports: ‘A booming U.S. economy is rippling around the world, leaving global supply chains struggling to keep up and pushing up prices. The force of the American expansion is also inducing overseas companies to invest in the U.S., betting that the growth is still accelerating and will outpace other major economies.‘
With a projected 7 percent annualized growth rate for the fourth quarter, the United States is running circles around Europe and China. That relative strength against the rest of the world, reflected in a strong dollar that lowers the cost of imports for U.S. consumers, matters greatly.
The economy grew 2.3 percent in the third quarter (higher than the expected 2.1 percent). Moreover, for all the talk of inflation and the pandemic, consumer confidence is through the roof. ABC News reports: ‘The Conference Board, a business research group, said Wednesday that its consumer confidence index — which takes into account consumers’ assessment of current conditions and their outlook for the future — rose to 115.8 in December, the highest reading since July.‘
…Furthermore supply chain woes are showing signs of abating. As Biden said at a meeting on Wednesday with his supply chain task force, “Packages are moving, gifts are being delivered and shelves are not empty.” He was also able to point to concrete steps his administration has taken to address the issue, such as obtaining the ports’ agreement to operate 24/7.“
The full editorial can be linked to below. Rubin’s first point about presidents getting too much credit and blame for the economy is a good one. Yet, they do provide headwinds and tailwinds, usually a little of both. Biden’s predecessor inherited an economy that was in its 91st consecutive month of economic growth in January 2017 with six consecutive years of 2 million plus annual job growth. To his credit, it continued and was lifted some by a temporary sugar rush of the corporate tax cut in 2018, before falling back to previous levels after the sugar rush waned. Once the pandemic hit, all bets were off and we retrenched.
Biden and Trump invested in stimulus payments to get the economy going providing money to spend. And, it helped tide us over until more of us started working. Was it the best use of funds? Arguably. Some contended we should have provided the subsidies to employers to keep people employed. I would preferred to have seen that, as people would still be tethered to their job. The recently passed Infrastructure Bill will provide some additional tailwinds as would the Build Back Better bill that is still waylaid.
Inflation is of course a concern. Yet, politicos like to highlight bad news when their tribe is not in charge and lessen the focus on good news. In addition to the new COVID strain, what gives me pause is the stock market continues to remain at record high levels. The question is how long can it remain there? If you know that, you are way ahead in the game.