A Biden Boom?

The economy looks to be in full recovery. But it's not clear how much credit the President deserves.

Writing at New York magazine, Eric Levitz sees enough good economic news to proclaim “The Biden Boom Has Begun.” But, while I voted for him and mostly support the early policies he’s rolled out, it seems silly to attribute much of what is happening to him. (And, no, I’m not suggesting we should credit Kamala Harris instead.)

The signatures of House speaker Nancy Pelosi, Senator Majority Leader Charles

Last week, fewer Americans applied for unemployment benefits than at any time since March 2020. Last month, retail sales in the U.S. rose by 9.8 percent, the largest increase in nearly a year. Factory activity in the state of New York just hit its highest level since 2017; in Philadelphia, manufacturers are now more confident about business conditions than they have been since 1973. As of this writing, U.S. stock values have hit an all-time high. All of this news is better than expected. And yet the yield on U.S. Treasury bonds declined Thursday morning — a sign that global investors believe America can have its post-COVID economic boom and its low inflation, too.

In other words, it’s a good morning for “Bidenomics.”

My longstanding position is that Presidents get far too much credit and blame for economic conditions, which are largely outside their control. Biden will naturally benefit from the good news and he should absolutely take credit, in that he’d get blamed if things were going in the other direction.

But here are the trendlines Levitz points to:

Retail sales (apparently not adjusted for inflation or population size) are at an all-time high. But, aside from the brief freefall at the height of the COVID lockdowns, that’s where the trendline was.

Similarly, jobless claims are as low as they’ve been since the COVID crash. But, again, that seems to have been the trajectory we were already on.

This is the most interesting one, in that I hadn’t seen this elsewhere: there is a ton of pent-up demand. And that’s after a massive paydown of credit card debt:

Now, that’s great news, indeed. And it definitely bodes well for a “Biden boom” in the future. There’s going to be some big-time spending in the coming months. Whether it’ll be a reprise of the last iteration of the Roaring Twenties (itself a response to a nasty pandemic) remains to be seen but there’s a lot of people tired of being cooped up with a lot of money to spend. Biden didn’t do much to create this either the demand or the means of satiating it but, again, he’ll get credit for it because post hoc ergo propter hoc may be a logical fallacy but it’s holy writ in presidential journalism.

Where Biden does deserve credit:

  • The massive and unnecessary stimulus dubbed the American Rescue Plan dumped a lot of money into the economy, contributing to both the excess savings and credit card paydown. I would have far preferred giving much more than $1700 to those devastated by the pandemic rather than $1700 to people who didn’t need it but, regardless, it’ll stimulate the economy.
  • His excellent leadership of the vaccine rollout will absolutely contribute to getting the economy opened back up and more safely than would otherwise have been the case. While the degree to which the Trump administration was botching the vaccine rollout was vastly oversold, Biden took key steps to order more vaccines and is certainly setting a better example.
  • The American Jobs Plan, which is a long way from passing and therefore not included in Levitz’ data, will almost certainly be a massive shot in the arm. Regardless of how much of it is “infrastructure,” and even granting that a decent chunk of it seems to be a sop to his union backers, it’s long past time to make many of these investments. In the short term, it’ll mean the creation of a lot of good-paying jobs. In the longer term, though, it’ll pave way for the continued modernization of the economy.

Ultimately, depending on the form the final bill takes, it’ll likely be the latter that will have the biggest impact on the economy and be the thing for which Biden deserves the most credit. But, politically, he’ll likely benefit more from things that were on track to happen, anyway.

FILED UNDER: Economics and Business
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. Not the IT Dept. says:

    Biden can be given credit for any economic good news that depends on the president not being a lunatic. And frankly, since he only got sworn in three months ago, the question is rather silly.

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  2. Sleeping Dog says:

    …Presidents get far too much credit and blame for economic conditions, which are largely outside their control.

    Given that President’s get blamed for downturns that they have little control over, letting them grab credit for booms is justified. Think for a moment, if the Former Guy were still around (SD cringes at the thought), his chest would be protrude beyond his ample belly and we’d not hear the end of it.

    Yes, the fortunes of the economy lie with Main St and corporate suites rather than the WH.

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  3. gVOR08 says:

    Obama got blamed for bad economic times he inherited from W. Trump took credit for Obama’s recovery. I agree with you that Biden’s getting credit for things he’s not responsible for. And I’m totally in favor of that.

    I also think a reelected President Trump wouldn’t have found some way to screw up vaccine distribution and the economy. And instead of aid and stimulus, McConnell would be pushing a top weighted tax cut.

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  4. Jay L Gischer says:

    I sort of agree. My stance toward this kind of understanding is more or less: “live by the sword, die by the sword”. Which is more or less what other commenters are saying upthread of me.

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  5. Michael Cain says:

    Just to note that the Roaring 20s was an almost purely urban thing. Most of rural America spent the decade in an ongoing recession. They were already in a very bad way when the Depression hit.

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  6. Barry says:

    James: “The massive and unnecessary stimulus dubbed the American Rescue Plan dumped a lot of money into the economy,”

    James, please look at the chart of unemployment claims. We are still at 3x to 4x the rate before the pandemic, eyballing the chart.

    ” I would have far preferred giving much more than $1700 to those devastated by the pandemic rather than $1700 to people who didn’t need it but, ”

    So would the GOP, because that’d take months, if not a year, and most of the people who really needed it wouldn’t get it, because of jumping through a million burning hoops.

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  7. Michael Reynolds says:

    @Barry:

    So would the GOP, because that’d take months, if not a year, and most of the people who really needed it wouldn’t get it, because of jumping through a million burning hoops.

    Exactly right.

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  8. Biden will get credit and if this continues into 2022 it will help Democrats in the midterms

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  9. JohnMcC says:

    @Doug Mataconis: From your lips to God’s ears.

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  10. Kylopod says:

    @gVOR08:

    Obama got blamed for bad economic times he inherited from W.

    That passive voice is doing a lot of work for you there. There were people who blamed Obama for the bad economy, but it was never a majority of the public; poll after poll showed the public naming Bush and the Republicans as the culprit in the bad economy. And while the slow recovery did apparently hurt him in the 2010 midterms, by 2012 when it finally started to take off, it definitely helped his reelection.

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  11. James Joyner says:

    @Barry: @Michael Reynolds: I took this position with the first Trump stimulus, with the proviso that we should claw it back from people like me at tax time. But the massive shutdown is all but over and has been for months.

    Again, though, if the argument is that it’s just too hard to get it to those who need it fast enough, fine. But then claw it back from the rest of us. I make enough that I didn’t qualify for this go-round but just barely. We’re giving $1700 to people who make $100,000 a year and have actually put money in the bank during the crisis.

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  12. Stormy Dragon says:

    @gVOR08:

    I also think a reelected President Trump wouldn’t have found some way to screw up vaccine distribution and the economy.

    A reelected Trump would be a nationwide version of what we see in Florida with DeSantis: vaccine allocations being prioritized to areas with the most campaign donors and being denied to areas that aren’t obsequious enough.

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  13. Hal_10000 says:

    My rule of thumb is that the President takes about 25% of the credit/blame for the economy for each year he’s been in office. So 25% after the first year, 50% after the second, etc. You can make a case that Biden deserves a bit more given the unusual circumstances. And you can argue that his (and Trump’s) economy are partially fueled by unsustainable deficit spending. But, in the end, I’m happing with giving him part of the credit, but not all.

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  14. @James Joyner:

    Assuming we get enough of a handle on the pandemic via vaccination and mitigation there will be an economic boom of some kind. The question is how big it will be. With all the small businesses that have closed during the pandemic and larger business realizing that having employees work from home works for them there’s going to be a lot of empty office space in cities like New York and elsewhere. They may also decide that they can get the job done with fewer employers which is why I think employment is going to take longer to get back near the level it was at before the pandemic than other economic indicators.

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  15. Michael Cain says:

    @Doug Mataconis: Metro Denver has something over 3.3M square feet of new office space under construction. 60 miles north in Fort Collins, where I live now, there’s on the order of a half-million square feet going up. The northern Front Range from the south part of the Denver metro up to Fort Collins has, the last thing I read, over 5M square feet of new warehouse space, much of it specialty in one way or another, being built. No one seems to think they’re going to have problems filling any of it.

    When we moved to Colorado a bit over 30 years ago, the state population was 3.3M. If we didn’t hit 6M in the recently finished census, we will in another year. It’s insane.

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  16. wr says:

    @Sleeping Dog: “Given that President’s get blamed for downturns that they have little control over, ”

    And considering that Republicans still blame Obama for the housing crash that started in March 2008…

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  17. Kathy says:

    @Doug Mataconis:

    [..]there’s going to be a lot of empty office space in cities like New York and elsewhere.

    Isn’t there also some buzz about a housing shortage?

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  18. @Michael Cain:

    The warehouse spaces will do well thanks to the increased use of online retail. I don’t know about the office space situation but if more people end up working from home then employers won’t need as much office space as they have now.

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  19. @Kathy:

    In some parts of the country yes

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  20. just nutha says:

    @Kathy: Yes, but as I understand it, it’s an affordable housing shortage, so it can’t be corrected because of reasons and stuff.

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  21. There are two industries that are going to have a tough time bouncing back. Airlines and travel in general, especially cruise ships.

    Thanks to Zoom and other means of online communication, businesses are likely to cut back on business travel. As for cruise ships, given what happened at the start of the pandemic I wonder how eager people are going to be to get back on a ship with more than a thousand other people.

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  22. Teve says:

    @Doug Mataconis: based on what I’ve seen here with spring break and Miami and some events in other states, as soon as restrictions are lifted a large number of people go hog wild and rapidly assemble into groups of thousands.

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  23. Kathy says:

    @Doug Mataconis:
    @just nutha:

    So, we’re looking at a possible combination of surplus, empty real estate and a shortage of affordable housing.

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  24. @Kathy:

    Depending on where you live yes

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  25. Michael Cain says:

    @Doug Mataconis:

    As for cruise ships, given what happened at the start of the pandemic I wonder how eager people are going to be to get back on a ship with more than a thousand other people.

    DeSantis, at least, seems to believe there will be a lot of them, and wants them getting on and off the ships in Florida. I seem to be hearing a lot of stories like this Horsey editorial cartoon.

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  26. Michael Cain says:

    @just nutha: Up and down the Front Range there’s an enormous housing boom going on — apartments, condos, townhouses, single-family houses . Ain’t none of it affordable, but they seem to be selling as fast as they get built. Denver is doing huge amounts of infill, building really nice new stuff in places that were near-abandoned old light industry.

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  27. Scott F. says:

    @gVOR08:

    Trump took credit for Obama’s recovery.

    Trump took credit for the economy rising during Obama‘s lame duck period, based on the specious idea that the Trump name alone was good for the markets. Then, throughout his presidency, Trump claimed an economic boom unprecedented in history despite the ongoing economy direction evident in the trend lines Levitz points to.

    Hell yes, Biden is going to get credit (to some degree undue) for the post-pandemic economy. He’ll never be such a dick about it as Trump was. That should be worth something.

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  28. Just nutha ignint cracker says:

    @Michael Cain: Yeah. Same in Portland, OR down by where I live. And not much of it is affordable, but some is “affordable” thanks to the socialists who hate America that we have here.

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  29. gVOR08 says:

    @Stormy Dragon:

    A reelected Trump would be a nationwide version of what we see in Florida with DeSantis: vaccine allocations being prioritized to areas with the most campaign donors and being denied to areas that aren’t obsequious enough.

    Likely true. Our beloved Governor DeUseless hasn’t done one thing that wasn’t to support his reelection. But Trump’s spawn, or spawn in law would be profiteering on vaccines. DePetomaine hasn’t stopped that low. But only because his oldest is only like four or five. But I’m sure his political calculations take into account that the 35 thousand dead FL COVID victims can’t vote.

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  30. Negraham says:

    @James Joyner: The additional savings I put back was the amount I no longer automatically paid to student loans and irresponsibly neglected to pay anyway.

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  31. Ken_L says:

    Presidents get far too much credit and blame for economic conditions, which are largely outside their control.

    I couldn’t agree more. But given the last guy bragged incessantly about creating the world’s greatest economy (if only you ignore the final year), I don’t begrudge Biden his time in the sun.

    Barring unforeseen events, the circumstances of the mid-term elections are going to be as favorable to the party in government as could be imagined. If the Democrats still lose one or both houses, it will be a very clear message that Washington has become entirely dysfunctional. If competent government doesn’t get rewarded by re-election, politics will have lost all rational guidelines.

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  32. Monalaa says:

    @James Joyner: It’s really hard to claw something like this back. Primarily, this is because the stimulus is considered an advanced tax credit, so it doesn’t add to the household’s income. If you made the stimulus income rather than a credit, then it would be easy to claw back from the upper income limits. However, people at lower income levels might suddenly find themselves in higher tax brackets because of the stimulus they received and thus owing more in taxes, reducing any gains the stimulus might have provided them.

    It’s not impossible to claw back a tax credit, but it is mighty difficult. The biggest example of this has been the Advanced Premium Tax Credit people receive to pay for health insurance on the ACA Marketplace. The form to determine if they got the right amount and whether they have to pay some of it back is extremely complicated (and has thankfully been waived for this year’s tax returns).

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