The Biden-Harris administration is poised to pull off something that hasn’t been managed in this century, something that has happened only other time since 1965. They’re about to stick the elusive “soft landing” with the economy.
Whenever inflation increases, the usual instrument for bringing it down is higher interest rates imposed by the Federal Reserve. Those higher interest rates can lead to a sharp decline in business purchases and consumer confidence. Buying drops off, the economy cools, and just like that … a recession.
Economists were predicting a recession even before there was a spike in inflation during 2022. The huge disruption caused by the COVID-19 pandemic, which temporarily sent unemployment soaring to the highest level since the Great Depression, required enormous government intervention to safeguard businesses and prevent individuals from losing everything.
It would take some amazing policies to tame unemployment, bring down inflation, and hold off recession. Managing all that while also creating a renaissance in American manufacturing, bringing tech jobs back from overseas, and shepherding the stock markets to unprecedented heights seems like more than anyone could expect.
Thank goodness the United States had President Joe Biden and Vice President Kamala Harris.
Once again, economists were predicting a cooldown in the American economy during the second quarter of 2024. That didn’t happen.
Instead, GDP growth surged, inflation declined, business investments increased, and consumer confidence rose.
Despite the continued high interest rates, consumer spending increased and businesses stocked up inventories at a strong rate. Best of all, those new orders from businesses were not stocking up against some expected disaster or trying to replace lost inventory from a break in supply lines. Businesses made bigger purchases because they were also making greater sales.
Economists have spent the past four years underestimating the policies of the Biden-Harris administration and predicting a recession. That’s not because they don’t like Joe or Kamala. It’s because they’re working from what they’ve seen in the past. Not since the 1990s has a much-vaunted soft landing been pulled off successfully.
What’s made this possible is an economy that’s incredibly robust on multiple fronts. The American Rescue Plan, the bipartisan infrastructure bill, the Inflation Reduction Act, and the CHIPS Act worked together like the legs of a chair, giving the nation’s economy the strength to weather the aftereffects of the pandemic. And not just survive, but grow.
The policies of this administration and the legislation designed in this White House have brought an extended period of very low unemployment while spurring growth. The return of American manufacturing is only getting started, but the momentum is headed in the right direction.
“Today’s GDP report makes clear we now have the strongest economy in the world,” Biden said in a statement Thursday. “The Vice President and I will keep fighting for America’s future—a future of promise and possibilities, of ordinary Americans doing extraordinary things.”
The only thing that’s left is to make sure that the next president will continue the policies that brought the U.S. through this storm, and take the nation into even greater growth and prosperity. Seems like there is only one good candidate for that job.
Economists didn’t expect Thursday’s good economic news … but you might think that after four years of seeing what this administration can accomplish, they could have a little faith.
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