President Joe Biden used Friday’s jobs report as another justification for his massive $1.9 trillion stimulus bill. “A once-in-a-century virus has decimated our economy, and it’s still wreaking havoc on our economy today,” he said. Funny, because that’s not what the data show.
Some Democrats are already coming to realize that piling another $1.9 trillion in deficit spending on top of the more than $3 trillion already targeting COVID relief is an enormous mistake. Here’s what Politico reported last week after liberal economist Larry Summers cautioned that the Biden plan was too big.
Summers, the former Treasury secretary for Bill Clinton and top economic adviser to Barack Obama, puts down on paper what many liberal wonks have been whispering about for weeks: that President Joe Biden’s stimulus bill may be too big, that its overall cost could sacrifice other progressive priorities and that it could harm the economy next year, when Democrats will be defending narrow congressional majorities in the midterms.
Summers warns of “inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability.”
Give Summers and those anonymous “liberal wonks” credit, at least, for staying in the neighborhood of reality, something that seems to have escaped “No Malarky” Biden.
Let’s review some of the more recent economic data to see where things actually stand.
Unemployment: The Labor Department reported Friday that the unemployment rate fell again to 6.3%. Not only is that well below where economists expected it to be, and it’s also lower than where it stood for two-thirds of the time Barack Obama and Biden were in the White House.
In fact, when Obama gave his State of the Union address in 2014, during which he bragged about how great the economy was, unemployment was at 6.6%.
Nor is the recent decline in the unemployment rate merely the result of people dropping out of the labor force (which was often the case during the Obama years). In fact, the number of people not in the work force – those who aren’t working or looking for a job – dropped by 2.7 million from last April to this January. So what’s going on is that more people are reentering the labor force, and finding jobs.
Biden Treasury Secretary Janet Yellen said Sunday that with the $1.9 trillion spending billion, “we would get back to full employment next year.” But the economy doesn’t need another massive stimulus for that, it just needs government to stop forcing businesses to stay shut.
GDP: Although it captured little attention, the Commerce Department reported on Jan. 28 that the economy grew by 4% in the last three months of 2020, after exploding by 33.4% in the third quarter.
As a result, the economy has already made up more than 86% of the ground it lost due to the (largely unnecessary) economic lockdowns of last year.
By the way, that 4% quarterly gain was higher than all but four of the 32 quarters under the Obama-Biden administration.
Now that even blue states are starting loosen the reins on their people and businesses, and as the vaccines reach more and more people, don’t be surprised if these outsized growth rates continue. (At least, that is, until Biden’s economic policies start to drag it down again.)
The Stock Market: From its nadir during the pandemic shutdown last March, the Dow Jones Industrial Average has climbed by more than 62%. It reached its pre-COVID peak by early November, and is now almost 6% above it. Clearly, investors don’t think the economy is in desperate need of rescuing.
The Committee to Unleash Prosperity recently tallied up other metrics showing that the economy isn’t in need of another massive stimulus.
The housing market is on fire. Recently the WSJ reported this headline: ‘Housing Prices Are Rising Everywhere in the U.S.’ The average home price rose 12% over the past year (Sept. 2019 – Sept. 2020).
The U.S. household savings rate is at or near a three-year high. Sending Americans another $1,400 of funny money is absurd.
The latest jobs report finds some 6.5 million open jobs across the U.S. of A. That’s more job openings than at any time during the supposed prosperous Obama years.
Wages and salaries rose a brisk 6.9% in the fourth quarter.
Americans’ wealth rose by $20 trillion last year with big gains for minorities and the middle class.
That’s not to say there still aren’t people suffering from the lockdowns and mandates being imposed by their state and local governments.
But Biden’s description of the economy is increasingly detached from reality. And the only reason he and his fellow Democrats have for urgency is that they want a massive wish list of liberal spending programs on the books before people realize it wasn’t needed.
— Written by the I&I Editorial Board