Washington, Jul 21 (VOA) – President Joe Biden launched an attack on his political opponents, including former President Donald Trump, on Monday touting the revitalized US economy, which has been recovering rapidly during his first six months in office. But some economists worry that the administration’s aggressive efforts to stimulate economic growth could lead to a recession next year.
Speaking from the White House on Monday, Biden reminded listeners of predictions of economic disaster that his detractors had insisted would follow his election as president.
Without naming him, the president referred to his predecessor, Republican Donald Trump, citing his prediction that if Biden became president, the country would experience “a depression like we have never seen before.”
3 million new jobs
Noting that the current reality of the American economy is quite different, Biden said: “We have gone from 60,000 jobs a month to 60,000 jobs every three days, more than 600,000 jobs a month since I took office. More than 3 million new jobs in total. That’s the fastest growth, they told me, in the history of any administration. “
In addition, he noted that the growth rate of the US economy was currently higher than it had been in nearly 40 years.
“And now, analysts have doubled their growth projections for the economy this year to 7% or more,” he said. “In fact, the United States is the only developed country in the world where growth projections today are stronger than before the pandemic.”
Some good credit
Even observers who do not necessarily agree with Biden on his economic policy agree that the president can take a substantial part of the credit for the rapid rebound in the economy.
“I think you can justifiably take credit for having an effective vaccination program in place,” said Desmond Lachman, principal investigator at the conservative American Enterprise Institute. “That means that people can go back to work and all the industries that were badly affected by the pandemic can go back.”
But when it comes to economic policy, it is unclear how much of the current rebound is due to the action of the administration and how much is a natural combination of delayed consumption by the population and businesses across the country, all now on the rise at the same time. time to return to a semblance of normalcy.
Right place, right time
“There is no question that Biden, and the administration in general, are the beneficiaries of being in the right place at the right time,” said David Wilcox, principal investigator at the Peterson Institute for International Economics.
However, Wilcox said, “Biden and his administration have done some things that have surely helped drive the speed of the economic recovery. Aggressive efforts to distribute the vaccine surely rank first on that list. More generally, reinforcing a science-based approach to public health, and the importance of respecting scientific guidance for public health must have made a difference at the margin.
“Then finally, a huge factor to consider is the enactment of the US recovery plan,” he added, “a historically large injection of stimulus – ultimately totaling $ 1.9 trillion – some of which was triggered. very quickly, “concluded the researcher.
It is that last factor, the stimulus, that has Lachman and many conservative commentators concerned.
Even before Biden took office, the government had spent nearly $ 4 trillion on various actions related to the pandemic, including direct grants, the Paycheck Protection Program, and additional funds to help agencies respond to the increase. demand for services related to the response to the pandemic. In March, that number jumped to nearly 6 trillion, when Biden signed the $ 1.9 trillion American Rescue Plan.
All of this adds to the Federal Reserve’s promise to keep interest rates low, almost certainly well into next year.
More proposed expenses
In his remarks Monday, Biden said it is essential for a continued recovery that Congress pass another important initiative, this one related to infrastructure, which would commit the government to another trillion dollars or more in spending.
“He’s really supercharging the economy,” said Lachman of the American Enterprise Institute, “and he’s doing it at the same time that the Fed is on the full pedal.”
Like several economists, including former Clinton Administration Secretary of the Treasury Lawrence Summers, Lachman says he is concerned that excessive cash flow into the economy will create an upward spiral of wage and price spikes that will force the Federal Reserve to sharply raise interest rates, causing another recession.
“It may all look great in 2021, but the question is, what will it be like in 2022?” Lachman said. “We could very well find ourselves in a hard economic landing.”
The delta variant
The wild card in all these considerations is the future path of the pandemic. Cases are increasing dramatically in the United States, albeit starting from low levels. If the delta variant, the most infectious of the disease, continues to spread across the country, particularly in unvaccinated populations, or if a vaccine-resistant variant emerges, much of the progress the country has made could be reversed.
As if to warn the president of the dangers of economic arrogance, the stock market saw its biggest single-day drop in two months on Monday, with the Dow Jones industrial average shedding 726 points, or about 2% of its value. Analysts attributed the dramatic decline to public concern over the rising number of COVID-19 cases.
Most of that drop was recovered Tuesday afternoon, but one message was clear: When it comes to economic recovery, no one really knows whether the administration or the virus will have the final say.