America’s jobs recovery had more to do with the unusual nature of the pandemic recession, brought about by lockdowns, than with Biden’s colossal stimulus.
Natale Labia writes on the economy and finance. Partner and chief economist of a global investment firm, he writes in his personal capacity. MBA from Università Bocconi. Supports Juventus.
In terms of laws passed, he may well be the most consequential Democratic president since Lyndon Johnson. The American Rescue Plan, the Inflation Reduction Act, last week’s Ukraine aid package and a vast infrastructure binge all form part of Biden’s list of important laws. Biden unsurprisingly likes to attribute such ebullient job creation to the $1.9tn “rescue plan” he unleashed shortly after taking office in early 2021. It consisted of nearly a third of America’s total pandemic-related fiscal stimulus, which in total was worth an astonishing 26% of GDP.
By March 2022, “core” consumer price inflation, which excludes energy and food, was over 5.5%, compared with barely 1% when he took office. This was significantly higher than in other G7 countries and its acceleration coincided with the introduction of the stimulus.Prices rose 3.5% in the March consumer price index which followed a 3.2% gain a month earlier. It is also proving more stubborn than inflation in other similar economies, such as the eurozone.
Such naïve and reckless economic policy may then lead to what will be Biden’s eventual legacy – a second Trump presidency. More voters trust Trump over Biden on the economy, with 40% saying they trusted his handling compared to 34% for Biden, according to the same poll. You can only conclude that Biden intentions might end up being disastrous if they result in a second Trump presidency if you already know that a Trump presidency will be disastrous.The inflation in the USA was caused not only by your so-called “well-meaning but disastrous President” but by factors outside Biden’s control, such as global supply-chain problems going back to the Reagan years.
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