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Feb. 28 (UPI) -- Joe Biden's presidency has faced serious economic challenges, but economists say U.S. recovery from the COVID-19 pandemic has been among the best in the world. Forecasts of increased unemployment and a recession have not come to pass as some experts expected. Instead, key metrics have signaled "good news" over the past year to 18 months.
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"The last year and a half, in terms of the economy, has been incredible good news," Joshua Gotbaum, a Brookings Institution economist, told UPI. "Unemployment has stayed at levels we haven't seen in 50 years."
David Wilcox, an economist with the Peterson Institute and Bloomberg Economics, told UPI, "The basic notion that in order to slow inflation we'd have to suffer a protracted period of substantial unemployment in excess of the long term average rate -- we just haven't had that.
"That's been a tremendous piece of good news that has defied normal textbook behavior."
UPI interviewed three economists on Biden's economic policy and the performance of the U.S. economy. The prevailing sentiment was that the economic recovery under the Biden administration has been exceptional.
Whether that should be attributed to Biden's policies, luck or a combination of the two is not yet clear. Economists expect to be studying that question for years to come.
"Biden benefits out of a simple calculation like job creation on an updraft that is largely out of his control," Chris Tilly, an economist and professor at the UCLA Luskin School of Public Affairs, told UPI. "The economic record of a four-year period is heavily dominated by luck, good or bad."
Unemployment spiked in the last year of Donald Trump's term as president, due in large part to the uncertainty of the pandemic. In April 2020, the unemployment rate reached 14.8%, the highest mark since the Great Depression. It steadily fell to 6.7% by year's end.
COVID-19 recovery
The first and biggest challenge Biden faced as president was recovering from the COVID-19 pandemic that was still running rampant. From a public health standpoint, this meant overseeing the delivery of the first vaccines. More than 600 million have since been administered.
"In March 2020, the macroeconomy entered an alternative universe. It took economic relationships we thought were pretty sturdy and reliable and it busted them," Wilcox said of the pandemic. "It clearly threw the U.S. macroeconomy and economies in many other countries into a sort of temporary aberrational form of behavior that economic forecasters didn't recognize."
From an economic standpoint, recovery meant delivering financial assistance to people and helping businesses. In March 2021, Biden signed the American Rescue Plan, a $1.9 trillion aid package approved by Congress.
The plan provided $350 billion for state and local governments, $130 billion for schools to prepare safety measures for reopening in-person, $300 billion for unemployment benefits and more.
Small businesses and restaurants that were particularly impacted by safety protocols also received assistance.
Funding for vaccine distribution was included, as well.
"A lot of people are losing hope," Biden said in a speech at the time. "A lot of people are looking to their government for help, to do our jobs and not let them down. So I'm going to act and act fast."
About 85% of households received aid through the program. This followed two rounds of stimulus checks in 2020 under the Trump administration. Unemployment benefits were extended, as was a moratorium on evictions.
Biden received heavy criticism for the stimulus package, Gotbaum recalls.
"Plenty of economists warned, 'Do you actually need an extra $2 trillion into the economy when we've already got $3-plus trillion sloshing around?'" he said. "It turns out the economy took it in stride."
Wilcox said the economy is crawling back toward "normal behavior." But he suspects it will be years before economists can draw a solid conclusion about the abnormal path it has taken toward this recovery period.
"I hope the conclusion will be 'for normal times, be prepared for hugely abnormal times,'" he said. "Keep in mind the possibility that what you thought you knew was an appropriate understanding of how the economy operates might need to be set aside in a crisis period."
Infrastructure projects
Biden closed out his first year in office by signing a policy he would go on to tout during a full-fledged tour of the United States. The Bipartisan Infrastructure Act dedicates $1.2 trillion in government spending to roads, bridges, airports, rail and more projects over a decade.
The law also aims to eliminate lead water lines and build high-speed Internet networks to close inequitable gaps in access. An emphasis on clean energy projects is built into the language of the law.
"Fifty years from now, folks are going to look back and say this was the moment, this was the period in this year and the next couple years when Americans decided to win the competition of the 21st century, to get in the game, full bore," Biden said following its passage.
The thinking behind this and other economic policies, as Biden has often remarked, is to build the economy "from the middle out and the bottom up." This means strengthening the working class that Biden says the economy is built on.
"When that happens, everybody does well," Biden said in a speech in Chicago last summer. "The wealthy still do well. We all do well."
As of November, about $400 billion in projects had been announced for 4,500 communities in 50 states, according to the White House. It also estimates about 670,000 construction jobs had been added since Biden took office.
"Certainly, there's past evidence that useful infrastructure that people are going to use does pay off," Tilly said. "There's a measurable impact on productivity. Something like infrastructure is spread more equally."
Among the many projects to receive funding through the law, Biden touted the Baltimore and Potomac Tunnel project as one of the single most impactful. The rail is a critical method of transportation for commuters in the northeast corridor, with about 200,000 people using it daily.
Semiconductor manufacturing
Biden's presidency has ushered in an emphasis on electric vehicles. It started with his goal for at least half of all vehicles produced in the United States to be electric by 2030. It was followed up with tax credits for electric vehicle adopters through the Inflation Reduction Act.
Days before the passage of the IRA, Biden laid the groundwork for shifting to electric vehicles with the CHIPS and Science Act. The law incentivizes investments toward bringing semiconductor manufacturing to the United States. Companies that make investments in semiconductor manufacturing may receive a 25% tax credit.
Semiconductors are a critical component in electric vehicles, as well as devices including air conditioners, cellphones, medical equipment and computers.
"America invented the semiconductor, but today produces about 10% of the world's supply and none of the most advanced chips," the White House said in a statement. "Instead, we rely on East Asia for 75% of global production."
The White House said the law would also make the U.S. supply chain more resilient. More than $230 billion in semiconductor manufacturing projects were announced in the first year since the passage of the law.
"That's a case in which there is policy developed in the Biden administration that has already seen results," Gotbaum said. "In terms of manufacturing, investment has risen substantially in the last year, clearly as a response to some of his legislation."
Inflation
Biden has received much criticism from political opponents for inflation and the high prices of goods since he took office.
The Federal Reserve raised interest rates up to 5.5% in an attempt to cool the economy and combat inflation. As Fed Chairman Jerome Powell addressed the continued rate increases, he repeatedly expressed surprise that the unemployment rate remained at a record low.
Whether Biden's policies have had a direct role in bringing down inflation while maintaining an unemployment rate below 4% is not so simple to answer.
"There was an enormous amount of stimulus provided in 2020. It continued when Biden came into office in 2021," Gotbaum said. "It clearly helped the economy recover, which it did really quite extraordinarily in 2021, 2022 and 2023. It also obviously led to inflation of a kind that hadn't been seen in decades."
Gotbaum adds that Biden has been "hands off" with the Federal Reserve. Instead, he took a more indirect approach to curbing inflation with the IRA, which incentivized clean energy investments and lowered the cost of prescription drugs.
According to the White House, more than $110 billion in new clean energy investments were announced in the year after the law was signed. More than 170,000 jobs were created in relation to such projects.
The law enacted a 15% minimum tax requirement for "large corporations" that the White House says will raise $300 billion over a decade.
The White House projects that consumers will save up to $38 billion on electricity bills between 2022 and 2030 as a result of clean energy investments.
"One of the things it did do was, in effect, it helped raise revenues on some things," Gotbaum said of the IRA. "There was also a set of tax incentives and loan programs they've been using -- again creatively -- that businesses are taking advantage of to actually do more investing on the ground in the U.S. in alternative energy."
