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SAN FRANCISCO / NEW YORK: Joe Biden returns to the White House to lead America in the midst of an economic crisis after beating President Donald Trump in Tuesday’s election, a turn of events that is likely to evoke an unsettling sense of neglect. vu for the United States. Former Democratic Vice President.
Unlike 2008, when the country elected Democrat Barack Obama and his running mate Biden as the world economy was reeling from the subprime mortgage crisis and the collapse of investment bank Lehman Brothers, the worst of the economic recession Current may have already passed, economists and analysts say.
“We kept falling into the abyss,” recalls Donald Kohn, who was vice chairman of the Federal Reserve during the Great Recession of 2007-09, which ranks as America’s worst recession since the Great Depression until it was overshadowed by the current crisis.
When Obama and Biden took office in January 2009, unemployment in the United States continued to rise: it would not peak until 10 months after their first term, when it reached 10%.
Biden, who had spent more than a quarter of a century in Congress before becoming vice president, helped push for an $ 800 billion stimulus package that was criticized by Republicans as wasteful and by those on the left for being too small. . “We know some of this money is going to go to waste,” he told business leaders in June 2009 with characteristic bluntness, urging them to accept the package.
America’s unemployment rate didn’t fall below the level it was at when Obama and Biden were elected until a year after their second terms.
Today, the economic outlook is unpleasant again, with the US economy technically in recession and 3.5% smaller than in early 2020, even after posting record growth in the third quarter.
Millions of Americans, especially in the restaurant, travel and entertainment industries, are still out of work, with no immediate job prospects in sight.
At worst, the current recession could expand an American lower class dominated by women and minority workers.
The coronavirus continues to rise in much of the United States, and consumer fear and new lockdowns will dampen prospects for economic growth.
But since the current crisis began with shutdowns in March to prevent the virus from spreading, the federal government has delivered trillions of dollars in stimulus and unemployment has fallen dramatically from its April peak of 14.7% to 6.9%. It is projected to decline further over the next year, not to rise as it did in 2009.
“It’s still a soft economy … the problem will be to complete the recovery,” says Kohn.
STIMULUS AND VIRUSES
Biden’s economic agenda is likely to focus first and foremost on getting the country through the coronavirus crisis, both as a health and an economic problem.
Much will depend on the approval of a pandemic aid package and the distribution of a vaccine that could be ready in early 2021.
Many US states are reporting record new coronavirus infections, and nearly 6,000 Americans died last week from the COVID-19 disease caused by the virus. On Friday, the day before election results in the battlefield state of Pennsylvania catapulted Biden to victory, the United States recorded more than 130,000 new cases, a single-day record.
“This president will have to guide the American population and the United States economy back to health before they can consider any structural changes in policy,” said Beth Ann Bovino, chief US economist at S&P Global Ratings.
Biden has promoted the use of masks and social distancing to slow the spread of the virus, and is generally expected to use established channels of the US government for the launch of a vaccine.
Senate Majority Leader Mitch McConnell signaled Wednesday that he was open to a new coronavirus aid bill in the “lame duck” session before newly elected members of the Senate and House of Representatives of the United States take the oath.
That package is likely smaller than Biden would have targeted if Democrats had retaken the Senate on Tuesday, but it may be enough to keep the recovery from faltering. Control of the Senate remains uncertain as the Republican-held two-seat races in Georgia will move into the second round in early January.
Getting a vaccine and more stimulus for the public would set the stage for a stronger recovery in the first months of 2021.
“There may be more political winds in favor of an economy that is improving,” said Jason Furman, who was the White House’s top economic adviser for much of Obama’s second term as president.
Biden’s plans include a federal minimum wage of $ 15, greater support for unions, and expanded protections for gig workers. He has also promised that his green energy policies will create millions of jobs, although some analysts are skeptical.
But because Republicans seem less likely to lose control of the Senate, Biden’s broader agenda, made up of a coalition of moderate and more left-wing supporters, may be hampered. – Reuters
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