adplus-dvertising
Connect with us

Economy

President Biden says his economic policies work. Experts weigh in

Published

1 year ago

 on

play

Show Caption

Hide Caption

Biden confronts divided Congress in State of the Union

President Joe Biden urged a divided Congress during his second State of the Union address to “finish the job” of rebuilding the economy and uniting the nation with the aim of reassuring a country beset by pessimism and fraught political divisions. (Feb. 8)

AP

As the 2024 presidential campaign heats up, President Joe Biden is expected to give a major speech in Chicago Wednesday touting his economic achievements.

Polls show Biden receiving low marks from voters for his economic record amid a two-year inflation spike that has eased but remains historically high. Just 33% of adults say they approve of his handling of the economy, according to a poll last month from The Associated Press-NORC Center for Public Affairs Research.

Broadly, Biden says his stimulus plan swiftly lifted the economy from the pandemic-induced recession. But critics say it went too far and helped trigger soaring inflation and rising interest rates that have the U.S. facing the prospect of another downturn.

Here are Biden’s main claims and USA TODAY’s analysis:

Strongest recovery, lowest inflation

Biden is expected to say that his policies have driven the strongest recovery among the world’s major economies and the lowest inflation, according to a White House preview. This is generally accurate, experts say.

Credit the American Rescue Plan (ARP), the $1.9 trillion COVID relief package that Biden spearheaded and Congress passed in March 2021. Among other things, it doled out $1,400 stimulus checks to most households, extended generous unemployment benefits, and provided more aid to small businesses.

The rescue bill – which followed $4 trillion in similar COVID relief measures in 2020 – was needed because the economy was at risk of slipping back into recession, says Mark Zandi, chief economist of Moody’s Analytics.

“We didn’t know how well the COVID vaccine was going to work,” Zandi says. “Who knew how the pandemic was going to play out? If you have uncertainty you want to err on the side of doing too much.”

Without ARP, 4 million fewer jobs would have been created in 2021, Zandi estimates.

But conservative economists say the stimulus wasn’t needed because the economy was already bouncing back from the COVID recession. Employers had added more than 1 million jobs during the first two months of the year, just before Congress passed the ARP.

Meanwhile, COVID vaccinations were ramping up quickly and many consumers were resuming dining out and other activities, says Chris Edwards, senior economist at the libertarian Cato Institute. As a result, he argues, the 22 million jobs wiped out by the health crisis were poised to come back even without the massive government aid.

“It was overkill,” Edwards says.

The result, he says, was a consumer spending spree that helped pushed inflation to a 40-year high of 9.1% in June 2022.

Although many economists blame COVID-related supply chain snarls for price run-ups across the globe, inflation was notably higher in the U.S. than in Europe in 2021. The disparity can be traced to the ARP, says Douglas Holtz-Eakin, president of the American Action Forum, a conservative think tank.

Zandi, however, says ARP’s effect on inflation was modest. It was COVID’s Delta variant in the summer of 2021 that intensified Asian supply troubles and propelled consumer prices higher, he says.

Now, U.S. inflation, at 4%, is lower than the euro area’s 6.1%, according to Trading Economics, a research firm.

Not just jobs, but good jobs

Biden’s strategy has created not only a record 13 million jobs in 2 ½ years. “It has created good jobs,” the White House said.

Employers are offering higher pay, better benefits, and more flexible schedules to attract and retain workers, the White House paper added.

The share of 25-to 54-year-olds working or looking for jobs is at 83.4%, highest since 2007, the paper noted.

Zandi agrees that ARP juiced consumer and business demand, forcing employers to step up hiring even as many workers retired early or left the labor force for COVID-related reasons. That spawned labor shortages, boosted average yearly wages by 5%, and led many workers to quit jobs for better, higher-paying positions.

But Edwards says much of that sizzling labor market was rooted in the easing pandemic, not the stimulus. And he says ARP’s enhanced unemployment benefits exacerbated labor shortages by giving workers an incentive not to go back to work even while job opportunities were growing.

Boosting the middle class

Biden’s policies have “helped put middle class Americans into stronger financial position than they were in pre-pandemic,” the White House says. “Americans have higher net worth and higher (inflation-adjusted) disposable incomes.”

According to Zandi, Americans are wealthier than they were before COVID because of the sharp rise in stock and home prices early in the crisis, along with savings from several stimulus checks.

Pay increases didn’t keep up with inflation for much of the pandemic, leaving low- and middle-income households struggling to keep up. But inflation-adjusted disposable income – a broader category that includes Social Security, investments and other income – is now running ahead of its pre-crisis level.

Biden also points to his sweeping legislation to invest in U.S. infrastructure, boost clean energy production, and encourage chip manufacturing in the U.S. – all of which he says will create good middle-class jobs.

And he notes that the Inflation Reduction Act lowers prescription drug costs and caps insulin prices at $35 a month for seniors, helping middle-class Americas.

“I think Biden’s economic policies were successful in getting the economy quickly back to full-employment, and will be helpful in lifting its long-term competitiveness and productivity by investing in the nation’s infrastructure and incenting semiconductor producers to expand production in the U.S.,” Zandi says.

But the more than $2 trillion in investments will swell the $32 trillion national debt and distort markets by providing subsidies to some industries over others, Edwards argues. The additional spending will mean a bigger tax burden for future generations, he says.

Zandi agrees. “The biggest failing of Biden’s fiscal policies,” he says, “is that they have added significantly to the nation’s debt load.”

Recall alert Honda Odyssey, Pilot, Passport among 1.2 million vehicles recalled. Check car recalls here.

Contributing: Francesca Chambers

Adblock test (Why?)

728x90x4

Source link

Related Topics:
Continue Reading

Economy

B.C.’s debt and deficit forecast to rise as the provincial election nears

Published

2 days ago

 on

September 10, 2024

By

 

VICTORIA – British Columbia is forecasting a record budget deficit and a rising debt of almost $129 billion less than two weeks before the start of a provincial election campaign where economic stability and future progress are expected to be major issues.

Finance Minister Katrine Conroy, who has announced her retirement and will not seek re-election in the Oct. 19 vote, said Tuesday her final budget update as minister predicts a deficit of $8.9 billion, up $1.1 billion from a forecast she made earlier this year.

Conroy said she acknowledges “challenges” facing B.C., including three consecutive deficit budgets, but expected improved economic growth where the province will start to “turn a corner.”

The $8.9 billion deficit forecast for 2024-2025 is followed by annual deficit projections of $6.7 billion and $6.1 billion in 2026-2027, Conroy said at a news conference outlining the government’s first quarterly financial update.

Conroy said lower corporate income tax and natural resource revenues and the increased cost of fighting wildfires have had some of the largest impacts on the budget.

“I want to acknowledge the economic uncertainties,” she said. “While global inflation is showing signs of easing and we’ve seen cuts to the Bank of Canada interest rates, we know that the challenges are not over.”

Conroy said wildfire response costs are expected to total $886 million this year, more than $650 million higher than originally forecast.

Corporate income tax revenue is forecast to be $638 million lower as a result of federal government updates and natural resource revenues are down $299 million due to lower prices for natural gas, lumber and electricity, she said.

Debt-servicing costs are also forecast to be $344 million higher due to the larger debt balance, the current interest rate and accelerated borrowing to ensure services and capital projects are maintained through the province’s election period, said Conroy.

B.C.’s economic growth is expected to strengthen over the next three years, but the timing of a return to a balanced budget will fall to another minister, said Conroy, who was addressing what likely would be her last news conference as Minister of Finance.

The election is expected to be called on Sept. 21, with the vote set for Oct. 19.

“While we are a strong province, people are facing challenges,” she said. “We have never shied away from taking those challenges head on, because we want to keep British Columbians secure and help them build good lives now and for the long term. With the investments we’re making and the actions we’re taking to support people and build a stronger economy, we’ve started to turn a corner.”

Premier David Eby said before the fiscal forecast was released Tuesday that the New Democrat government remains committed to providing services and supports for people in British Columbia and cuts are not on his agenda.

Eby said people have been hurt by high interest costs and the province is facing budget pressures connected to low resource prices, high wildfire costs and struggling global economies.

The premier said that now is not the time to reduce supports and services for people.

Last month’s year-end report for the 2023-2024 budget saw the province post a budget deficit of $5.035 billion, down from the previous forecast of $5.9 billion.

Eby said he expects government financial priorities to become a major issue during the upcoming election, with the NDP pledging to continue to fund services and the B.C. Conservatives looking to make cuts.

This report by The Canadian Press was first published Sept. 10, 2024.

Note to readers: This is a corrected story. A previous version said the debt would be going up to more than $129 billion. In fact, it will be almost $129 billion.

The Canadian Press. All rights reserved.

Source link

Continue Reading

Economy

Mark Carney mum on carbon-tax advice, future in politics at Liberal retreat

Published

2 days ago

 on

September 10, 2024

By

 

NANAIMO, B.C. – Former Bank of Canada governor Mark Carney says he’ll be advising the Liberal party to flip some the challenges posed by an increasingly divided and dangerous world into an economic opportunity for Canada.

But he won’t say what his specific advice will be on economic issues that are politically divisive in Canada, like the carbon tax.

He presented his vision for the Liberals’ economic policy at the party’s caucus retreat in Nanaimo, B.C. today, after he agreed to help the party prepare for the next election as chair of a Liberal task force on economic growth.

Carney has been touted as a possible leadership contender to replace Justin Trudeau, who has said he has tried to coax Carney into politics for years.

Carney says if the prime minister asks him to do something he will do it to the best of his ability, but won’t elaborate on whether the new adviser role could lead to him adding his name to a ballot in the next election.

Finance Minister Chrystia Freeland says she has been taking advice from Carney for years, and that his new position won’t infringe on her role.

This report by The Canadian Press was first published Sept. 10, 2024.

The Canadian Press. All rights reserved.

Source link

Continue Reading

Economy

Nova Scotia bill would kick-start offshore wind industry without approval from Ottawa

Published

2 days ago

 on

September 10, 2024

By

 

HALIFAX – The Nova Scotia government has introduced a bill that would kick-start the province’s offshore wind industry without federal approval.

Natural Resources Minister Tory Rushton says amendments within a new omnibus bill introduced today will help ensure Nova Scotia meets its goal of launching a first call for offshore wind bids next year.

The province wants to offer project licences by 2030 to develop a total of five gigawatts of power from offshore wind.

Rushton says normally the province would wait for the federal government to adopt legislation establishing a wind industry off Canada’s East Coast, but that process has been “progressing slowly.”

Federal legislation that would enable the development of offshore wind farms in Nova Scotia and Newfoundland and Labrador has passed through the first and second reading in the Senate, and is currently under consideration in committee.

Rushton says the Nova Scotia bill mirrors the federal legislation and would prevent the province’s offshore wind industry from being held up in Ottawa.

This report by The Canadian Press was first published Sept. 10, 2024.

The Canadian Press. All rights reserved.

Source link

Continue Reading

Trending