The Biden presidency is setting a bar for economic performance that has never before been hit and is unlikely to be matched again. This is not by chance.
A few things to remember about Biden.
1. Obama gave him responsibility for leading the 2008 Great Recession recovery efforts. Obama was opposed at every step of his presidency and in the economic recovery, with unemployment persistently and depressingly high, his recovery plan was one more defined by austerity than stimulus. The unemployment rate in his first term averaged 9%. That was an extraordinarily painful period for Americans that - unsurprisingly - created extremists on both side of the political divide, from the Occupy Wall Street crowd who denounced markets and banks to the Tea Party folks who denounced government and regulation. Biden clearly learned that cautious recoveries are of little benefit to communities, families, or government budgets. Austerity in the face of a recession is a ridiculous way to recover.
2. Biden has been around forever and this is an asset. Biden knows the personalities and weaknesses of world leaders you've heard of and policy makers and staffers who you've never heard of. Biden knows which sharp policy wonks have ideas for stimulating investments, create jobs, and lower carbon emissions. He knows how to get people from across the aisle to vote for his infrastructure spending. Put more simply, Biden knows policies, policy makers and politicians - American and foreign. This makes him incredibly effective.
3. Biden's policy wonks are at work on programs that will never get properly covered because they're largely too ... well, wonky to appeal to the average reader who just wants to hear why they should be offended at Trump today or get confirmation that this week - sure enough - Biden is another week older. Someday some of his policy makers will write fascinating books about the causes and consequences of this economy and a few of us weird people who delight in things like that will delight in that; most people will remain blissfully unaware.
4. Biden consciously incurred a big fiscal deficit in his first year knowing that the best way to reduce long-term debt is to stimulate an economy to its full potential. He realized that the first priority was to put Americans back to work and then household and government budgets will strengthen. But his policy was not a one year, one trick policy. He's stimulating investments in local communities that result in new infrastructure, new factories, and new training programs. And the result is dramatic: projections of long-term deficits have halved since Biden has taken office. link
Biden's policies are stimulating the economy from a number of directions. He's ignited a variety of infrastructure projects. The interstate highway bill Eisenhower signed into law stimulated GDP growth by roughly 0.5% per year for decades. (And when average GDP growth is close to 2%, 0.5% extra is extraordinary.) The interstate highway bill stimulated the economy during highway construction. That won't surprise you. And then it stimulated the economy as people used it, stimulating travel, trade, and inter-city and interstate exchange as chains like McDonalds and Hilton Hotels emerged. Biden is not just stimulating the economy with various infrastructure projects and subsidies to alternative energy projects and manufacturing, he's setting us up for years of extra economic activity as these new bridges continue to stimulate trade and travel and these new factories continue to support jobs and productivity.
The most extraordinary outcome of Biden's policies is the incredible rate of job growth. One of the elements behind that that is rarely reported? The extraordinary rate of new business formation. This statistic gets hardly any coverage and yet seems to me the most important of all economic statistics - speaking as it does to the levels of optimism and long-term implications for the creation of new jobs, new products, new services, new markets, and new wealth. New business formation in the decade of the 2020s is running at TWICE the level it did in the decade of the 2000s. Double. 2X. So, so much more. And the ripple effect of that is one reason that in the first quarter of 2024 - now in the fourth year of the recovery from the worst of COVID - job creation is running at an even higher rate than it did last year.
The phenomenal rates of business formation and job creation are not the product of chance. They are the result of policy choices from a politician who delights in politics and policy in a time when it is so very stylish to hold politicians, politics and policy in contempt. Fortunately, Joe Biden still thinks that politics and policy matter, and rather than blow things up the way his predecessor did, he's building an economy that creates jobs and businesses at the fastest rate in your lifetime.
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