US economy set for a boom?
How President Biden is able to navigate a partisan divide, pandemic may mean success
BALTIMORE—When Joe Bid en entered the White House as vice president, the economy was cratering. Job losses were mounting. Stocks were crashing. Millions of Americans were in the early stages of losing their homes to foreclosure as the housing bubble burst.
Bid en returns to the White House as president a dozen years later with the economy battered and shaken by a pandemic. But this time is different — and it could reset the nation’s politics if Biden and Democrats can count on a level of growth not see nina generation.
Despite the 9.8 million jobs lost due to the coronavirus, there are signs the country is on the cusp of a kind of boom unseen in the Obama and Trump eras.
Checking account balances have surged by $2.4 trillion since the outbreak began. Home prices are soaring because of hot demand. And each additional vaccination moves the world’s largest economy closer to fully reopening.
“If the economy is improving substantially by spring or early summer, that might actually help Biden get more of his agenda done ... because success can beget success,” said Jason Fur man, a top economist in the O ba ma administration.
But hanging over any effort to boost the economy is an enduring partisan divide that contributed to the deadly assault on the U.S. Capitol this month. Politics is increasingly shaping how Americans feel about the economy, scrambling the political incentives for lawmakers to cooperate.
There also are concerns about whether the worsening pandemic and slow pace of vaccination st hus far could portend more serious problems on the corona virus front that could hurt the economic recovery.
The potential for a boom reflects in large part the roughly $4trillion approved so far in federal aid, with Biden last week proposing $1.9 trillion more, an unprecedented level of stimulus. The additional money, which must be approved by Congress, is intended to accelerate the vaccine rollout, reopen schools and reduce the child poverty rate to a historic low.
The investment bank Gold man Sachs es timates that growth this year could be 6.6% if part of Biden’s stimulus plan passes. That would be the strongest gain since 1984, when a7.2% increase in the gross domestic product helped carry Republican President Ronald Reagan to a second terminal and slide. Wells Fargo forecasts growth of 4.6% this year, which would be the best since 1999.
Still, there are plenty of economic risks facing Biden. The most bullish forecasts hinge on getting much of Biden’s aid package through Congress. And any gains would probably depend on overcoming the pandemic. There is also the possibility that the added stimulus championed by Biden could be more than the economy needs
But the Great Recession taught Biden’s team the benefit of going big with stimulus. Incoming White House Chief of Staff Ron Klain says Biden’s officials learned the hard way that the roughly $800 billion approved in 2009 to fight the Great Recession was insufficient, a mistake they’re unwilling to repeat this time.
Republican lawmakers still see the need for more aid to contain the pandemic, but some are voicing concerns about Biden’s desire for another big spending package. They stress that any new spending should be directed toward increasing vaccinations.