Economic policy of the Biden administration
The economic policy of the Joe Biden administration, colloquially known as Bidenomics, is characterized by relief measures and vaccination efforts to address the COVID-19 pandemic, investments in infrastructure, and strengthening the social safety net, funded by tax increases on higher-income individuals and corporations. Other goals include increasing the national minimum wage and expanding worker training, narrowing income inequality, expanding access to affordable healthcare, and forgiveness of student loan debt. The March 2021 enactment of the American Rescue Plan to provide relief from the economic impact of the COVID-19 pandemic was the first major element of the policy. Biden's Infrastructure Investment and Jobs Act was signed into law in November 2021 and contains about $550 billion in additional investment, to repair infrastructure like roads, bridges and water pipes and expand passenger rail and broadband. Biden signed two additional major pieces of longer-term economic legislation to boost semiconductor investments and public basic research, and expand green energy and health insurance subsidies.
The first year of the Biden presidency saw strong growth in real GDP, wages, employment, stock market returns, and household net worth, coupled with an increase in inflation, as the economy recovered from the pandemic recession of 2020. During 2022–2023, the unemployment rate averaged 3.6%. By April 2024, the unemployment rate had remained below 4.0% for the longest sustained period since 1953. Monthly job creation averaged a robust 402,000 from inauguration through February 2024, or 273,000 from June 2022, when the pre-pandemic jobs level was regained. However, past this point unemployment continued to increase to 4.3% in July 2024. Inflation increased up to 9.0% in June 2022, then began falling. By June 2023 inflation was 3.1% and remained around that level through June 2024. As of November 2024, the inflation rate was 2.7%, with rent price increases contributing roughly half. While inflation was similar to peer countries, the U.S. has outgrown its peers. The Federal Reserve rapidly raised a key interest rate from March 2022 until August 2023, and is expected to lower interest rates in the second half of 2024. The stock market repeatedly broke record highs in 2024.
The New Republic praised Biden's economic record in July 2024, highlighting how record low unemployment led to wage growth at the lower half of the distribution. In October 2024, 35% of households with incomes below $50,000 a year were living paycheck to paycheck, up from 32% in 2019. The expansion of the Affordable Care Act, the child tax credit, $1400 stimulus checks, and the expansion of SNAP benefits also boosted balance sheets for low and middle-income Americans. New business formation is also up 30% from pre-pandemic levels, and notably strong among women including women of color. Biden took antitrust law enforcement more seriously than presidents in recent memory, as seen by the work of Lina Khan at the FTC. The administration also pursued lower drug prices by allowing Medicare to negotiate the prices it pays and capping the price of insulin.
Surveys have also found most Americans view their own economic situation positively and rate their local and state economies as doing better than the national economy, hinting at a disconnect fueled more by media narrative. For example, a March 2024 CBS News poll found that 65% of Americans viewed the economy under Biden's predecessor, Donald Trump, as good, whereas only 38% expressed a similar positive opinion of the current economy under Biden. However, exit polls of voters in the 2024 presidential election found that 45% of voters stated their personal financial situation was worse than in 2020, which exceeded the 42% number in the 2008 election and was the highest since the question was asked. Only 24% of voters said their personal economic situation was better. This negative perception was credited for Trump's reelection.
Overview
President Biden described his economic philosophy via Twitter in June 2023: "Bidenomics is about growing the economy from the middle out and the bottom up, not the top down. It's an economic vision where we make smart investments in America, educate and empower American workers, and promote competition to lower costs and help small businesses."2021
President Biden inherited a challenging economic and budgetary situation from President Donald Trump, due significantly to the COVID-19 pandemic. As of December 2020, the jobs level was nearly 10 million below the early 2020 peak, and the unemployment rate was an elevated 6.7%. There was a record budget deficit in fiscal year 2020 of $3.1 trillion, or 14.9% GDP.Biden's first major legislative response was the American Rescue Plan Act enacted in March 2021, a $1.9 trillion package that included $1,400 checks per adult, an expanded child tax credit for a year with $250–300 monthly checks per child expected to drastically reduce child poverty, extended unemployment benefits, and expanded eligibility for healthcare benefits, among others. The primary impact was in fiscal year 2021, with a smaller impact in FY 2022. No Republicans in the House of Representatives or the Senate voted for the Rescue Act.
Biden followed-up with the Infrastructure Investment and Jobs Act, signed into law in November 2021. It authorized infrastructure investment of $1 trillion total over a decade for roads, bridges, airports, sea ports, rail, broadband, water, and public transit, among others. CBO estimated the deficit impact at $250 billion total, as they considered prior infrastructure investment trends as a baseline for comparison. The law passed the Senate in bi-partisan fashion, 69–30.
Real GDP grew 5.9% during Biden's first year, the fastest rate since 1984. Amid record job creation, the unemployment rate fell at the fastest pace on record during Biden's first year, from 6.4% in January 2021 to 3.9% by December 2021. However, inflation significantly increased in 2021 relative to 2020 in the U.S. and Europe, attributed to factors such as strong consumer demand for goods, supply restrictions in port capacity and microchips, and lower 2020 prices.
Inflation was partially offset by strong wage growth; by one measure, worker wages and benefits increased at the fastest rate in at least 20 years. The administration noted that high inflation was also present in the Eurozone, Canada and the United Kingdom, though economists said the $5 trillion in government stimulus spending in the United States during 2020 and 2021 was disproportionately large compared to that of other countries and was a significant contributor to domestic inflation.
Despite the pandemic and inflation challenges, Bloomberg News reported in November 2021 that the S&P 500 stock market return of 37.4% in Biden's first year was the highest of any modern president. The stock market gains and significant housing price increases contributed to record household net worth of $142 trillion by Q4 2021.
The budget deficit in fiscal year 2021, the last year budgeted by President Trump, was $2.8 trillion, down from $3.1 trillion in FY 2020.
2022
A global inflation surge that began in 2021 and peaked in June 2022 before declining through 2023 and into 2024.The unemployment rate averaged 3.6% in 2022, the lowest since 1969. The number of persons working regained the pre-pandemic peak in June 2022 after revisions, and continued to set records monthly thereafter, reaching 154.5 million by December 2022, with monthly job creation averaging a robust 400,000.
In July 2022, The Wall Street Journal reported that "Household finances are as strong as they've been in decades, thanks to money saved during the pandemic, debt paid off over the past decade and a strong job market." As of Q1 2022, households had also accumulated $5 trillion more in deposit, savings and money market accounts than pre-pandemic. However, some measures of consumer sentiment indicated near record low satisfaction with the economy, mainly due to inflation.
Biden said in May 2022 that "Bringing down the deficit is one way to ease inflationary pressures in an economy." The budget deficit fell by $350 billion in FY 2021. It fell by $1.4 trillion in FY 2022, about 50%, or $1.8 trillion excluding student loan forgiveness of $425 billion, which CBO had scored as spending but later was blocked by court rulings.
During July 2022, there was much media discussion regarding whether the U.S. had entered a recession, despite a strong labor market with low unemployment and robust job creation. The real GDP level fell slightly during Q1 and Q2 2022, but then rebounded in Q3 2022 to surpass the previous record level set in Q4 2021. Some countries use two negative quarters as the definition of a recession. However, the National Bureau of Economic Research is the organization that declares an economic peak and starting point of recessions in the U.S. They reference six key measures in their analyses. All six measures increased from December 2021 to November 2022, signs of growth rather than recession. Predictions of an imminent recession continued through 2023, but by October indicators showed economic acceleration and analysts revised their economic forecasts upward; a Wall Street Journal survey of economists that month found a recession was not foreseen in the coming twelve months.
During August 2022, Biden signed into law the CHIPS and Science Act and Inflation Reduction Act.
Concerns regarding inflation resulted in the Federal Reserve raising interest rates significantly during 2022, to slow the economy, specifically the "very strong" labor market. Strong household financial positions, rapid wage growth, low unemployment, and a record ratio of open jobs to unemployed were cited by Fed officials as key inflationary concerns. The December 2022 Fed forecast projected an increase in unemployment from 3.7% in November 2022 to 4.6% by the end of 2023, with the Fed driving unemployment higher through raising interest rates and other measures.
The number of persons without health insurance under age 65 fell from 31.2 million in 2020 under President Trump, to 27.0 million during the first half of 2022 under President Biden, a reduction of 3.2 million or 13%. The percentage of uninsured fell from 11.5% to 9.9% during that time. Both the number and % were record lows for data back to 1997.