In a break from unremitting glum news cycles, President Biden is on a bit of a roll. Surely, no one thinks inflation is behind us or that the pandemic is over. But progress on several fronts comes as a relief to nervous Democrats who have been freaking out over Biden’s falling poll numbers, the Virginia gubernatorial race and the Build Back Better sausage-making.
The latest good news: Two financial ratings agencies have blessed Biden’s argument that his BBB and infrastructure plans will not stoke inflation. That will make it harder for Sen. Joe Manchin III (D-W.Va.) to drag his feet in supporting the reconciliation package.
Reuters reports that William Foster, vice president and senior credit officer at Moody’s Investors Service, does not believe Biden’s plans will “have any real material impact on inflation.” In the same vein, Mark Zandi, chief economist at Moody’s Analytics (independent from the ratings company), opined, “The bills do not add to inflation pressures, as the policies help to lift long-term economic growth via stronger productivity and labor force growth, and thus take the edge off of inflation."
Fitch Ratings also projects that inflation won’t be affected in the short term, although “government spending will still add less to demand in 2022 than in 2021 and over the longer-run, the social spending legislation could increase labor supply through provisions such as childcare, and productivity.”
In a largely symbolic move, Biden also sent a letter to the Federal Trade Commission asking it to investigate "mounting evidence of anti-consumer behavior by oil and gas companies.” This was part of his effort to show he is focused on inflation and Americans’ cost increases.
Related or not, Manchin declared on Wednesday that he would be willing to take a vote on the reconciliation plan by year’s end, which he has so far been hesitant to do. “I’m not in charge of the timing. Whatever they want to do is fine with me,” he said. "If we’re gonna vote, vote.”
Meanwhile, in the battle to straighten out the supply chains, Target and Walmart announced sales were up and that shelves would be stocked for the holiday shopping season. And consumer spending bumped up in October as well. Matthew Sherwood, global economist at the Economist Intelligence Unit, told CBS News: “Although consumer sentiment is being hit hard by the sharp rise in inflation, it is not enough to keep households from hitting the stores and gearing up for Christmas.”
The much-improved job situation is also welcome news at the White House. “The government sharply underestimated job gains for most of 2021, including four months this summer in which it missed more job growth than at any other time on record,” The Post reported. “In the most recent four months with revisions, June through September, the Bureau of Labor Statistics (BLS) reported it underestimated job growth by a cumulative 626,000 jobs — that’s the largest underestimate of any other comparable period, going back to 1979. If those revisions were themselves a jobs report, they’d be an absolute blockbuster.”
Perhaps the most critical, long-run news came from Biden’s covid-19 task force on Wednesday: 80 percent of Americans 12 and older have received at least one vaccine dose. Plus, 10 percent of younger children got their first dose in the first two weeks of the vaccination push for the 5-to-11 age group. After his experience with the delta variant, Biden certainly will not declare final victory, but along with the potential release of two oral treatments for covid-19 in the near future, Americans might be able to envision the pandemic fading into the background — the most critical factor in an economic recovery. The shift from a deadly pandemic to an endemic virus for which vaccines and treatment are widely available is the best way to return to normal economic activity.
Biden sounded ebullient on Wednesday while speaking in Detroit, yet he did so without straining the credulity of the media outlets that predicted economic ruin ahead. He also got some desirable images at the grand opening of GM’s Factory ZERO driving an electric Hummer, always a mood-lifter for the car-loving president. “God, it’s good to be back in Detroit,” Biden said. “And that Hummer is one hell of a vehicle, man.”
He also had a chance in New Hampshire on Tuesday to tout the infrastructure package, his biggest legislative win to date. “Despite the cynics, Democrats and Republicans, we can work together. We can deliver real results,” he said. “We can deliver real people — results that are going to affect their lives. We’re taking a monumental step forward.” He stressed the law’s impact on U.S. competitiveness with China in the electric vehicle market.
This is no victory lap. Nevertheless, the appearance of forward progress comes just in time to short-circuit the ominous news cycles, allowing Biden to project confidence and putting Republicans in the position of appearing to root against the economy. That is indisputably an improvement for Democrats.