• The San Juan Daily Star

How’s the economy? Biden sees a boom. Many Americans don’t.

President Joe Biden boards Air Force One at Joint Base Andrews, in Maryland, Wednesday, Dec. 8, 2021. Biden has tried in recent weeks to balance his efforts to cast the recovery as strong, citing job gains and falling unemployment claims, while also acknowledging rising inflation.

By Jim Tankersley

President Joe Biden and his top aides are struggling to bridge the gap between the economy they want to celebrate and the one that has left many Americans anxious and frustrated, as a record-setting recovery collides with prolonged inflation and an ongoing pandemic that has left consumers deeply pessimistic.

The challenge begins with a disbelief of sorts among Biden’s economic advisers. They insist the job market, with a 4.2% unemployment rate, has never been better, delivering wage gains for lower-paid workers that Biden believes will help lift more people into the middle class. They say those benefits will endure for years, even once inflation, which last month accelerated at its fastest pace in 40 years, cools down.

The struggle is also entwined with Biden’s fight against COVID-19. Administration officials say that the anxiety voters are expressing to pollsters is less about the economy and the president’s handling of it and more an expression of pent-up frustration with a pandemic that has persisted for nearly two years.

White House officials say they have no plans to shift Biden’s messaging on economic issues, even as poll after poll shows his approval ratings in decline and voter worry over inflation swamping all other views of the economy. Their strategy remains focused on stressing the administration’s work to spread vaccinations and end the pandemic without further lockdowns, cheering the nation’s progress in economic growth and promising that Biden’s policies will bring down prices for oil, food and consumer goods.

“Every economic indicator shows an economy that is growing, that is stronger, that is creating jobs, that is putting more money in people’s pockets, and that is in part a result of President Biden’s economic agenda,” said Kate Bedingfield, White House communications director. “I think what you hear from the president is that he understands that when people experience a higher price at the grocery store or at the gas pump that has an impact on their budget, and so he’s doing everything in his power to bring those prices down.”

Administration officials have consistently underestimated the size and persistence of price increases throughout this year, declaring at regular intervals that they would abate as various pandemic-related challenges worked their way through the global economy. On Friday, after the Labor Department reported that prices rose at their fastest annual rate since 1982, Biden issued a statement saying the data did not reflect more recent trends, which he said showed prices moving down for cars and gasoline, among others.

“I think it’s the peak of the crisis,” Biden told reporters later in the day. “And I think you’ll see a change sooner and quicker and more rapidly than it will take than most people think. Every other aspect of the economy is racing ahead. It’s doing incredibly well. We’ve never had this kind of growth in 60 years, but inflation is affecting people’s lives.”

Biden described rising prices, including gas prices, as a “bump in the road.” He said passing his social spending package will relieve pressure on American families.

Polls suggest that the disconnect between the president’s view of the economy and that of voters could pose political problems for Biden and fellow Democrats in the 2022 elections. But Biden’s team is undeterred. They see the economy showing signs of what liberal economists have long said is the recipe for delivering the full gains of economic growth to low-paid and middle-class workers, even after factoring in rising prices.

The ingredients include a tight labor market, where job openings far outnumber job seekers and employers are forced to raise wages for workers in retail stores and restaurants. And they include robust government aid programs over the past two years that have helped American workers build up savings, pay down debt and avoid the threat of eviction or foreclosure.

Officials point to estimates by Arindrajit Dube, an economist at the University of Massachusetts at Amherst, that find the lowest-paid 70% of American workers have seen wage increases over the past two years even after accounting for inflation. They say the raises and pandemic aid programs, including direct checks to low- and middle-income households and an expanded tax credit for parents that has been delivered in monthly payments, have given typical households an inflation-adjusted increase in how much money they have to spend.

But other measures suggest workers are correctly perceiving a slowdown or reversal in their real wage gains. An analysis by Jason Furman of Harvard University, a former top economist for President Barack Obama, shows most workers have seen slowing inflation-adjusted wage gains — or even wage declines — that have worsened as price increases heated up this year. Friday’s consumer price index underscored the point, showing surging prices for rent, cars, gasoline and household staples like cereal and eggs.

“The real economy is doing quite well both in absolute terms and somewhat well relative to expectations,” Furman said in an email. “Inflation and real wages, however, are terrible.”

The president has in recent weeks painted a bifurcated picture of the economy in speeches and news releases. He promotes what he calls historic progress on several measures. But he quickly turns to acknowledging the sticker shock that families have experienced at the grocery store, the gasoline pump and a variety of online shopping sites.

“Economic growth is stronger here than virtually any other nation,” Biden said Friday. “Americans have more money in their pockets than this time last year — $100 more each month than last year — even after accounting for price increases. But we have to get prices and costs down before consumers will feel confident in that recovery. That is a top goal of my administration.”

While Biden’s comments are aimed broadly at voters, they have a singular intended audience in Congress: Sen. Joe Manchin, D-W.Va., a centrist who has cited inflation as a reason not to back a $2.2 trillion collection of spending programs and tax cuts that Biden is attempting to pass through Congress by year’s end, jeopardizing the bill’s prospects.

Biden will need every Democrat in the Senate to support the measure for it to pass. Manchin has in recent days repeated his fear that the spending in the bill, which includes initiatives to fight climate change and invest in children, parents and workers, could further exacerbate price increases — a claim that administration officials and Biden say is unfounded. Biden said Friday that he would meet with Manchin next week.

Republicans have used inflation as a club against the bill and Biden’s popularity. “There would never be a good time to pass the Democrats’ reckless tax-and-spending spree,” Sen. Shelley Moore Capito, R-W.Va., said Friday, “but these inflation numbers indicate that now is the absolute worst time for Democrats to do just that.”

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