Hilton: Economy 'historically bad' despite Biden admin's spin
'The Next Revolution' host Steve Hilton and Fox News contributor Jason Chaffetz discuss the 'political spin' from the White House about the economy.
President Biden has been attempting to claim credit for our recovering economy over the past year, but polling shows the American people are unimpressed. According to the Real Clear Politics average of polls, 57% of Americans disapprove of Biden’s handling of the economy while only 38% approve. So, does Biden deserve more credit? A realistic look at the numbers clearly shows that he does not.
Let’s consider Biden’s most recent claims with respect to the growth in gross domestic product (GDP) and jobs in 2021. Biden often blames bad economic news on the pandemic but is quick to take credit for good economic news. So, it’s fair to ask whether 2021’s positive GDP and jobs numbers are due to Biden’s economic policies or the economy rebounding from an economically disastrous pandemic?
GDP was up 5.7% in 2021, the biggest increase since 1984. That’s great news! Biden claims it’s because "[t]he Biden economic plan is working, folks." But does the growth in GDP really show that his plan is working?
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It’s good to remember GDP is a year-over-year number. In other words, it’s easier to have a high percentage increase in the current year if you’re rolling over a large decrease in the prior year. In 2020, red and blue state governors shut down their states’ economies to slow the pandemic’s spread.
With our economy shut down, GDP understandably declined by a significant 3.4%, the largest drop since at least 1948. So, with the bar set at an historic low of -3.4% in 2020, GDP naturally rebounded in 2021. No surprise here.
The fact is that when states reopened, given the depths to which the economy sank, GDP was going to increase no matter what.
To make the nature of this 5.7% increase even clearer, let’s look at GDP dollars (as opposed to percentages). In 2019 (pre-pandemic), GDP was about $19 trillion. Because the economy was shut down for much of 2020, GDP dropped to about $18.4 trillion. In 2021, it rose again to about $19.4 trillion. That’s an increase for 2021 of 2% over 2019, a fairer comparison and a less than impressive gain.
The fact is that when states reopened, given the depths to which the economy sank, GDP was going to increase no matter what Biden did. As it turns out, GDP increased only 2% over its pre-pandemic level – and that was with gargantuan government spending.
Some economists argue that Biden's massive $1.9 trillion spending spree, which the Democrats passed in March, contributed to 2021’s GDP growth. But, to the extent that is true, there was a costly trade-off. That spending fueled a surge in demand, overwhelming already strained supply chains and driving inflation to a four-decade high.
While Biden’s spending spree and any associated growth are over, the impact of Biden’s inflation and our inflated national debt are here to stay. Faced with paychecks that are worth less every month as inflation eats away any gains, "folks" might well wonder if Biden’s "economic plan is working," as he claims.
Bottom line, as states reopened their economies in 2021, GDP growth not surprisingly recovered and would have done so – without a 40-year high in the inflation rate – had Biden simply done nothing.
That brings us to Biden’s second claim – "a record number of jobs created." Because of the pandemic-induced economic shutdowns, the economy lost about 9.4 million jobs in 2020, the steepest job loss on record. As we emerged from the pandemic, we recovered about 6.5 million jobs in 2021, or a return of 70% of the jobs we lost.
In other words, while a large number of people have returned to work (Biden claims these are jobs his policies "created"), we’re still 2.9 million jobs, or 30%, below pre-pandemic levels.
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So are Biden’s economic policies responsible for that 70% of jobs recovered or is it states reopening their economies? Well, it turns out that the red states leading the way in reopening their economies are also leading the way in creating jobs.
According to the Bureau of Labor Statistics’ state-level December jobs report, Republican governors lead 16 of the top 20 states for post-pandemic jobs recovered, and 18 of the top 20 have Republican-controlled legislatures. Of the top 20 states with the lowest unemployment rates, Republican governors lead 16 and 17 have Republican-controlled legislatures. Republicans lead the 10 states with the lowest unemployment rates while Democrats lead the seven states with the highest unemployment rates.
If there is any credit to be given for jobs returning to our economy, the numbers certainly indicate that it’s Republican governors who deserve that credit.
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But, if you consider people "returning" to their pre-pandemic jobs as "creating" jobs, it is true that the economy "created" a record number of jobs in 2021. However, crediting Biden’s policies for those jobs simply doesn’t meet the smell test. Clearly, we are looking at a natural rebound from historic job losses in 2020 led by Republican governors who have reopened their states’ economies. When blue states finally follow suit, maybe we can recover the remaining 30%.
With vaccines, natural immunity and states reopening their economies, GDP was going to increase and jobs were coming back in 2021 no matter what. As for Biden’s economic policies, the recovery would be stronger, inflation would be less and this horrific period would end sooner if Biden had done nothing – or were Donald Trump still president.
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