Biden’s Economic Challenge: Finding Workers and Goods

President Joe Biden enters the 2022 midterm election, determined to do something about what economists call a “supply problem”: There aren’t enough job seekers or goods to meet the country’s needs.

This is also a political problem. The mismatch has obscured the strong growth and unemployment rate of 3.9% during Biden’s first year, the kind of achievements that would typically help the president and congressional Democrats chase voters in midterm elections. It has led Biden to demonstrate his economic achievements while trying to fend off Republican criticism that his policies have fueled inflation..

“This is the kind of recovery I promised and hoped for for the American people,” the president said in a comment on Friday. “My focus is on keeping this recovery strong and sustainable, despite Republican obstruction. Because, you know, I know that even as jobs and household incomes have recovered, families still feel the squeeze of prices and costs.”

Pessimism has overtaken Americans’ view of the economy, even though the economy is objectively better than it was in 2020, just before Biden took office. The consumer confidence index tracked by the University of Michigan is down 12.5% ​​from a year ago, despite people being vaccinated and 6.4 million jobs added in the past 12 months.

Shoppers are focused on shortages of cars, bath towels and even cereal. Employers are unable to fill the 10.6 million jobs they advertise, Friday’s employment report found showed only 199,000 jobs in December. Prices for almost everything are rising — with forecasters expecting an annual increase of 7.1% in next Wednesday’s inflation report.

House Republican leader Kevin McCarthy ignored the obvious positives in the economy and blamed the government for any shortcomings.

“President Biden has been in office for nearly a year, and our economy is still missing millions of pre-pandemic jobs, consumers are facing inflationary pressures not felt in nearly 40 years, and employers continue to struggle with persistent labor shortages,” he said. the report. A California lawmaker said in a statement.

As a policy and political challenge, White House officials say they are figuring out how to increase the supply of workers and goods this year as the pandemic and supply chain problems continue. They must do so while sustaining consumer and business demand, two pillars of economic strength that are byproducts of last year’s $1.9 trillion emergency aid package. The government expects inflation to decline, but is not prepared to wait idly for it.

The government sees the supply factor as the only viable solution, as the alternative would be to cut government spending to reduce demand in ways that could harm people’s well-being and ability to spend and invest.

“We have very strong demand in this economy and we have limited supply,” said Jared Bernstein, a member of the White House Council of Economic Advisers. “There are two ways to go after that imbalance. You can overturn the demand side and essentially make people poorer so they don’t have the resources to go after what they want. Or you can try to expand the supply side – that’s what we do.”

Biden announced a slew of initiatives to unclog supply chains so that container ships can dock faster and large trucks get on the road faster with full trailers. Efforts include updating gates with $1 trillion infrastructure bill, as well as executive actions to increase the number of commercial truck drivers and plans to increase domestic production of computer chips.

The White House says it is already fixing the supply chain. It released a memo reporting a rise in retail inventories and a 39% drop since November in shipping containers waiting nine days or more in ports.

Biden has also said his proposed investments in childcare, families and health care — which have stalled in the Senate — would ease supply restrictions by making it easier for more parents to work. But his arguments for the nearly $2 trillion in spending and tax hikes failed to convince West Virginia Senator Joe Manchin., the decisive Democratic vote, who fears inflation and wants to demand that families receiving the child tax have a job.

At the heart of the staff shortage is also the ongoing threat of the pandemic. The first wave in 2020, followed by the delta and now ommicron variants have made it more difficult for people to return to work or train for new professions. That has led to a shortage of workers and exacerbated supply chain challenges and inflation.

“The virus remains the biggest problem in today’s economy,” said Aaron Sojourner, an economist at the University of Minnesota. “Millions of workers miss work each week because they have COVID symptoms or they are caring for someone with symptoms, and the unvaccinated workers are 2.4 times more likely to miss work.”

Sojourner estimates that only 39% of Americans of working age have been fully vaccinated and given a booster shot. That leaves 36% who need a booster and 25% who have never been fully vaccinated.

Heather Boushey, also a member of the White House Council of Economic Advisers, said the pandemic has caused massive unemployment and disruption for families and businesses. But she said the supply chain challenges are more difficult to address due to their global nature and the fact that they present some long-lasting challenges unrelated to the coronavirus.

“This isn’t just in the United States — this is a global problem,” Boushey said.

Friday’s employment report showed how difficult it can be to increase the number of workers seeking jobs, said Tyler Goodspeed, an economic adviser in the Trump administration who is now a fellow at Stanford University’s Hoover Institution.

The report came out for the likely impact of the ommicron variant of the coronavirus, which has led to the closure of schools and some businesses. Still, it showed that the percentage of people in the workforce has not risen substantially, a sign that the supply of available labor is tight, even though the US still has 3.6 million jobs below pre-pandemic levels. There has also been a shortage of business investment since the pandemic, making it more difficult to increase inventories in the economy, Goodspeed said.

“It’s hard for me to see how supply will keep pace with demand in 2022,” he said.

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