Perception has not yet caught up with reality, but President Biden and the Democrats are ready to oversee the biggest boom in the U.S. economy in decades.
Over the first three quarters of this year, real GDP grew at an annual rate of 7.8 percent – adjusted for current inflation. The Federal Reserve expect real growth of 5.9 percent for the whole of 2021, followed by another 3.8 percent increase in 2022. By any recent standard, these are extraordinary gains. From 2000 to 2019, real GDP grew at an average annual rate of 2.2 percent and never reached 3 percent. Investors noted: From January 20 to December 7, 2021, the S&P 500 Index rose 21.7 percent.
Strong growth usually means healthy income gains, and the disposable income of Americans grown 3 percent after inflation over the 10 months from January to October. It surpasses profits of only 0.5 percent for the comparable period in 2019 and 1.7 percent in 2018. Wages and salaries account for almost all of most households’ incomes, and those earnings are also rising much faster than normal. From January to October, all wage and salary income paid by private enterprises rose by 2.4 per cent after inflation, compared with gains of 0.3 per cent for the comparable period in 2019 and 0.7 per cent in 2018.
Biden and the Democrats have put in place smart policies to fuel the boom
Republicans have a history of taking good economies and making them bad by repeating one mistake over and over. When Republicans see a good economy, they immediately move to reduce taxes for the rich and corporations.
Under George W. Bush, they cited this policy to help job creators, as they promised that cutting taxes for the rich would cause them to spend more money on job creation.
The job creators took the money and ran.
During the Trump presidency, Republicans tried the same tactic again, promising that tax cuts for the rich and corporations would lead to higher wages, as the richest Americans would generously pass on their tax cuts to their workers.
Biden and the Democrats are targeting the middle class and below with their tax cuts. Their policies such as the CARES law and infrastructure are meant to fuel the boom by creating more jobs.
The perception of the economy always stays behind the figures. Inflation is a supply chain issue that should be resolved within a few months. Gas prices fell by twenty percent within three weeks.
If Biden gets inflation and gas prices under control, the American people will notice, and the midterm elections could be very different from what Republicans expect.
Mr. Easley is the managing editor. He is also a White House Press Pool and a congressional correspondent for PoliticusUSA. Jason holds a bachelor’s degree in political science. His graduate work focused on public policy, specializing in social reform movements.
Awards and professional membership
Member of the Professional Journalists Association and the American Political Science Association