The NPR Politics Podcast - How Successful Was The Biden Administration In Managing The Economy This Year?

Episode Date: December 23, 2021

The Biden administration laid out his main priorities as the president took office: tackling the pandemic, responding to the climate crisis, addressing racial inequality, and rejuvenating the economy. Over the next few weeks, the NPR Politics Podcast will check in on whether those goals being met.President Biden's first legislative push was the American Rescue Plan, a roughly $2 trillion economic stimulus plan that expanded help for unemployed workers and issued direct cash payments to millions of people. The pandemic and supply chain issues, though, have proved tenacious. Many workers have seen their nominal wages rise, but persistent inflation has blunted the impact of the gains.This episode: White House correspondent Ayesha Rascoe, White House correspondent Tamara Keith, and chief economics correspondent Scott Horsley.Connect:Email the show at [e-mail] the NPR Politics Podcast Facebook Group.Subscribe to the NPR Politics Newsletter.Find and support your local public radio station.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

Hey there, it's the NPR Politics Podcast. I'm Aisha Roscoe. I cover the White House. And I'm Tamara Keith and I also cover the White House. So we're doing some podcasts to close out the year that are focused on what President Biden said were the four pillars of his agenda as president. Those four pillars for those who might not have been studying this, it's racial equity, fighting COVID, climate change, and building the economy. Today, we're going to focus on the economy. And to do that, we brought in the economy master, Scott Horsley. Hi, Scott. Great to be with y'all. Depending on the day, you're Dr. Doom or not so Doom. Exactly. He covers the economy for NPR, obviously, and a very good friend of the podcast.

So, Scott, it's been a really weird year for the economy. So start with employment, which is one of the main things that people focus on when you're talking about the economy. Things have been just up and down with the pandemic. And now it's the unemployment rate officially is low. But for some reason, people aren't out celebrating in the streets. Like, can you explain what's going on with that? Well, it's been a really mixed bag. You know. If you go back in the Wayback Machine to this time last year, the economy was actually hemorrhaging jobs. We lost more than 300,000 jobs in December of 2020. And we were in the midst of a winter COVID surge, but it looked as if there was nowhere to go but up because vaccines were beginning to roll out.

It looked like the table was set for a huge improvement in the job market in 2021. And by some measures, we did get that. I mean, we had months of really strong job growth, like March and June and July, more than 6 million jobs all told in 2021, with December numbers still to come. But it hasn't been a straight line. It hasn't just been all positive. It's been this roller coaster where in between those great months of job growth, we had really disappointing months. And the most recent figure for November was actually the weakest job growth of the year. Now, I should say a lot of these numbers do get revised, and maybe that November number will be revised upwards. But mostly what

we're really seeing here is the ups and downs of the pandemic itself. I mean, you can still see a very close relationship between surges in the pandemic and declines in the economy. We had a really strong spring and early summer of economic growth when the pandemic was kind of at its low point. And then when the Delta wave came, we had an economic slowdown, job growth slowed down. Then it looked like we were getting another sort of second wind in the early part of the fall. But there's no question that the economic fortunes are still very much tied to the public health picture. And just as the public health picture has been uneven with ups and downs, so has the economic picture. Yeah. There has been some, you know, some bright spots. You know, wages, especially for low-income workers, had been

stagnant for years and years. But those have gone up as, you know, restaurants have tried, restaurants and places like that have tried to draw people back into the workforce, right? Absolutely. You know, we're still, we still have something like two and a half million people who left the workforce during the pandemic who have not yet returned. And that's why you do see this remarkably tight job market, even though we're still about 4 million jobs short of where we were before the pandemic. Employers are having a tough time recruiting people to staff their restaurants, to work the assembly lines. And that has given the people who are in the workforce more bargaining power. We have seen average wage gains over the

last year of 5.9%. That's good in normal times, although it's not quite keeping pace with inflation. But at the lower end of the wage scale, we've seen really strong gains. You mentioned leisure and hospitality, typically a low-wage industry, but those wages have gone up about 13% over the last year. So that's actually, you know, well above the rate of inflation. Folks on the bottom rungs of the economic ladder are actually seeing their buying power improved because of this very tight job market. And that's good. We like to see strong wage gains, especially for those who've been kind of left out for a long time. Yeah, I mean, the crazy thing is there was so much political fight on the Democratic side about a $15 minimum wage for so many years, and now there are places, signs up, $15, just come work.

Yeah, I talked to a restaurant owner just last week as we were waiting for the inflation numbers, and he said, you know, that minimum wage argument is kind of academic now, because at least if you're in a city in this country, you're going to have to be, that's the price of admission if you want to get people in the door. But certainly we have to talk about inflation. And that is the headline. That is what everybody is looking at. The rising cost of things like meat and used cars and certainly at the gas pump. People get very worked up about seeing, you know, the price of gasoline because it's something that you can drive by and you see it going up and you feel it. You know, it takes more money to fill up your tank and you have to fill up your tank to get up your tank to take your kids here and there, get to work. So that rise in prices has really affected people.

It really has, and it has been larger and more stubborn than a lot of forecasters expected. What we're seeing here is the collision of really strong consumer demand. People are buying an awful lot of stuff, partly because they're making money at their jobs or because they get that extra money from the federal government. There's been really strong consumer demand. We're buying more stuff than ever before. And yet supply is still really constrained, both because of transportation bottlenecks and because factories in this country and overseas are having trouble keeping people on the job because of COVID. And so when you have a lot of demand and not enough supply, prices keep going up. And that's what we're seeing. The November inflation reading of 6.2% was the highest since all the way back to 1982. Now, the Federal Reserve, which is the main inflation watchdog, continues to think that

this is likely a byproduct of the pandemic. And if we get control of the pandemic or when we get control of the pandemic, then prices will settle back down to something more normal. But obviously, that's taking a lot longer than anybody would like and a lot longer than a lot of folks thought it would take. All right. Well, let's take a quick break and we'll talk more about this when we get back. And we're back. On the whole, Tam, how are Americans seeing Biden's performance on the economy right now? I think the term is underwater. Far more people at this point disapprove of his performance on their his handling of the economy than approve. And, you know, that that took a turn around the end of the summer. he had been performing pretty well, his approval on the economy. And, you know, right around the time that people started really worrying about COVID again, or had increased

frustration with the pandemic, they also had to increase concerns about the economy. So as one person told me, the pandemic is a giant wet blanket on a lot of things, including sentiment about the president's performance and also the economy, because uncertainty, nobody likes uncertainty. And the pandemic, as we've said, is really interrupting what could have been sort of straight line economic recovery. Each subsequent wave of the pandemic has kind of tapped the brakes on what should have been a stronger economic recovery. Each subsequent wave of the pandemic has kind of tapped the brakes on what should have been a stronger economic recovery. Now, you know, you can say that the Biden administration has done really everything it can to try to get a handle on the pandemic.

And it's been frustrated in many cases by, you know, opposition to vaccines among Republican policymakers, opposition to vaccine mandates. But there's no question that if the pandemic is interrupting the economic recovery, that's going to weigh on the measure of the president's economic management. There are lots of measures by which the economy is doing pretty well. As I say, 6 million jobs in a year is very strong. We're probably going to end the year, even with all these ups and downs, with the fastest economic growth in decades. And yet, people are really focused laser-like on those inflation numbers, which are painful for people. I mean, economics is like psychology in so many ways. And people, human beings, are far more apt to focus on what makes them upset than what makes them happy.

And you do have Republicans sort of cheerleading for that anger. You had Rick Scott, who's the Republican senator from Florida and runs the Republican Senate campaign arm, telling the Wall Street Journal high inflation is a goldmine for the GOP. So they're certainly happy to capitalize on the political pain, not only to people's pockets, but to the president's approval rating here. So, I mean, and the thing about this is presidents do get, they definitely get blamed for the economy when things aren't going as good as people would like them to do. They get some credit, usually from their own party, maybe from independents, when things are going well, even though presidents generally don't have like a whole lot of control over the economy.

But I think some president back in the day did say, it's the economy, stupid. Is that right? Somebody said that. Somebody said that. Presidential candidate. Presidential candidate. Presidential candidate said, it's the economy, stupid. So regardless of how much impact Biden can have, he will likely rise or fall on the economy, right? One pollster I was talking to this week was talking about how Biden is so well known for his empathy. But, but her sense from from focus groups was that Biden isn't necessarily displaying that empathy as much as he could or should when it comes to the economy. And

this is a challenge that certainly Obama administration faced. Every president faces this challenge where, you know, they want to shout from the rooftops, look at how low unemployment is, or look at these great numbers. But if people are still feeling pain, sort of balancing the, hey, look, things are great with the, I know you still feel rotten. It's a very difficult balance. And I think it's a challenge for Biden as it has been for past presidents. Okay, so I want to kind of end on a question that I know sometimes reporters don't like because you say you're not psychics, you don't have crystal balls. But what what should people expect going into 2022 when they're thinking about the economy?

What what is it? What is on your what are you looking out for and what should they be looking out for, Scott? As I said a year ago, I think we sort of felt like we were at rock bottom and there was only one way to go and that was up. We have come a long way since then, but I think we've also learned that there are multiple ways that we can go. My guess is the economy will continue to get stronger, more people will continue to go back to work, and that inflation will come under control, not in the next few months, but by the middle or latter part of next year. But I say that with a great deal of humility as someone who's been wrong a lot during the last year. And there's just an awful lot of variables, chief among them, what happens with the public health outlook.

And Tam? You know, I think one thing that I am watching, and I don't know the answer, but I think that we're going to see a continuation of this, is what does pandemic burnout look like in the workforce? We've already seen this great resignation. I don't think it's done. And the other thing that, you know, I think it's one of those things where it will take a while for the economic analysis to catch up with what's happening. But how many people are permanently or semi-permanently gone from the labor force because of long COVID or other really dramatic things that have happened

in their lives because of this pandemic? How many people still feel too much uncertainty about whether their kids will stay in school? And the effects of the deaths, right? The people who died. Yeah, and the effects of the deaths. So I think that there's more analysis to come about what this pandemic has done to just reshape working in America. All right. Well, we will leave it there for today. Thank you so much to Scott, the master of the economy and definitely the economic master for the politics podcast. Thank you. Great to be with you. I'm Aisha Roscoe. I cover the White House.

And I'm Tamara Keith. I also cover the White House. And thank you for listening to the NPR Politics Podcast.