When it comes to the economy, U.S. presidents are like NFL quarterbacks: They probably receive too much credit when things go well and too much blame when failure strikes. President Biden may be an exception, though.
Despite plenty of positive economic news, the president’s agenda of “Bidenomics” isn’t catching on with the American public. The unemployment rate is low, job growth remains strong, a recession so far has been avoided and inflation has abated. Mr. Biden often touts his administration’s investments in, for instance, domestic chip manufacturing and infrastructure as pro-middle class. But as Northwestern University economist Robert Gordon explains in this episode of History As It Happens, ordinary Americans define Bidenomics differently than the White House does.
“This gets at the puzzle of why Biden is so unpopular,” said Mr. Gordon, the author of “The Rise and Fall of American Growth.”
“The way Biden would like to define it is the Inflation Reduction Act, which is a misnomer. It was primarily a climate change act providing massive subsidies for electric vehicles, for solar and wind, for expanding the electric grid, together with the CHIPS Act that provided $50 billion in subsidies for domestic and foreign firms to build new semiconductor chip factories in the United States. And finally, the infrastructure act which is going to provide all sorts of help for highways and bridges and also for mass transit,” said Mr. Gordon, who added that even though inflation has decreased, most essential items needed by American households are still more expensive than they used to be.
“What the average person sees, however, is that the price level has gone up under Biden’s administration compared to what they remember under Trump four years ago,” he said.
Also in this episode, Mr. Gordon discusses the reasons why economic growth has slowed and income inequality has worsened since the 1970s. He contends that from 1870 to 1970, a slew of one-time innovations, such as rural electrification and the invention of the internal combustion engine, catalyzed economic growth. Since the 1970s, however, the decline of labor unions, increases in imports and immigration, poor educational outcomes at the bottom end of the economic spectrum, the effects of automation in destroying middle-income jobs, and the decline of the purchasing power of the minimum wage, have all depressed growth while exacerbating inequality.
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