This week in Bidenomics: Brag much?
President Biden has little in common with his predecessor, Donald Trump. But there’s this: Both men boast shamelessly about the performance of the economy under their watch.
With his usual hyperbole, Trump often claimed the economy during his presidency was the best in recorded history. Fact-checkers dutifully called attention to superior GDP numbers from 1984 or 1966, but in reality, the Trump economy, B.C. (Before COVID) was pretty darn good. Unemployment fell to the the lowest level in 51 years and earnings growth hit the highest levels since the last recession.
Biden is also an economic braggart. After the latest employment report showed a monthly gain of 850,000 new jobs, Biden declared that, “Since I took office, our economy created 600,000 jobs per month. We’ve now created over 3 million jobs, more than ever created during the first five months of a presidency in modern history.” He credited the American Rescue Plan, the huge relief bill Congress passed in March, and said Congress should now pass his other two economic plans, to finish the job.
Biden’s facts are correct. But he generously credits himself for the nation’s economic gains when other forces are at work. The net employment gain from January through June was 3.02 million jobs, by far the most at the beginning of any presidency in data going back to the 1930s. The next best performance was the 2.2 million jobs created from January to June of 1941, which was the beginning of Franklin Roosevelt’s third presidential term and the start of the mobilization for World War II.
But did Biden’s presidency accomplish this? Hardly. Biden came into office with fortuitous timing this year. The Food and Drug Administration approved the Pfizer and Moderna Covid vaccines last December, a month before Biden took office. That opened the door to the economic recovery that’s now underway.
By the numbers, the job recovery was actually stronger during the last nine months of the Trump presidency than during the first five months of Biden’s. After employment bottomed out last April, employers added back 12.6 million jobs during the next nine months, for an average of 1.4 million new jobs per month, or 133% more than Biden has averaged so far. Employment backslid a bit from November through January, creating the impression that Biden's inauguration on January 20 somehow reignited the labor market. But that was mostly the economy tightening up during the worsening winter bout with COVID, then beginning to loosen as the promised vaccines became to find their way into arms.
Biden deserves credit for the smooth distribution of vaccines and other improvements on Trump’s chaotic handling of the coronavirus pandemic. But perhaps not as much as he claims for himself. On July 2, Biden pointed out that the Congressional Budget Office (CBO) has upgraded its estimate of 2021 GDP growth from 3.7% in February to 7.4% in early July. That’s true.
But Biden also said that’s “in large part because of the American Rescue Plan.” The CBO didn’t say that. The only reference the CBO made to the Biden-backed relief bill Congress passed in March was its estimate that the bill would add $1.1 trillion to the national debt. The ARP might have helped the economy, but it may also be contributing to inflationary pressures, and federal jobless benefits now extended until September may be keeping some workers from looking for jobs and contributing to a labor crunch.
The economy, meanwhile, still has a lot of healing to do. Total employment is still 6.8 million jobs below the pre-pandemic peak, with the hard-hit leisure and hospitality industry still down 2.2 million jobs. A pernicious problem is labor force participation, with the current participation rate, 61.6%, 1.7 points below pre-pandemic levels. That dropoff might seem small, but it represents nearly 3 million Americans who used to be interested in working but no longer are. There’s no guarantee they’ll return, one indication the labor shortage is real and not a confection of stingy employers.
Biden is not a one-time braggart. He often begins public remarks by touting his accomplishments, and the White House regularly sends out fact sheets explaining how “Biden’s economic plan is working.” This isn’t just back-patting. Biden is still pushing Congress to pass another $4 trillion in new spending on climate change, infrastructure, social welfare and other priorities. Getting public buy-in for future plans requires convincing voters that Biden has ably steered the economy up till now. He’s nudging the tiller, for sure, but the economy has a way of steering itself. Biden is lucky, so far, that it’s moving in a favorable direction.
Rick Newman is the author of four books, including "Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. You can also send confidential tips, and click here to get Rick’s stories by email.
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