The economic policy of the Joe Biden administration, dubbed Bidenomics (a portmanteau of Biden and economics), is characterized by relief measures and vaccination efforts to address the COVID-19 pandemic, investments in infrastructure, and strengthening the social safety net, funded by tax increases on higher-income individuals and corporations. Other goals include increasing the national minimum wage and expanding worker training, narrowing income inequality, expanding access to affordable healthcare, and forgiveness of student loan debt. The March 2021 enactment of the American Rescue Plan to provide relief from the economic impact of the COVID-19 pandemic was the first major element of the policy. Biden's Infrastructure Investment and Jobs Act was signed into law in November 2021 and contains about $550 billion in additional investment. His Inflation Reduction Act was enacted in August 2022.
Biden's first year in office (2021) saw strong growth in real GDP, wages, employment, stock market returns, and household net worth, coupled with an increase in inflation. During his second year (2022), the unemployment rate averaged 3.6%, the lowest since 1969. Monthly job creation averaged 400,000, with the number of persons with jobs regaining the pre-pandemic peak in June 2022. Inflation peaked in mid-2022 and remains elevated, with the Federal Reserve rapidly raising interest rates.
Overview
Bidenomics
Biden described his economic philosophy via Twitter in June 2023: "Bidenomics is about growing the economy from the middle out and the bottom up, not the top down. It's an economic vision where we make smart investments in America, educate and empower American workers, and promote competition to lower costs and help small businesses."
2021
President Biden inherited a challenging economic and budgetary situation from President Trump, due significantly to the continuing COVID-19 pandemic. As of December 2020, the jobs level was nearly 10 million (6%) below the early 2020 peak, and the unemployment rate was an elevated 6.7%. There was a record budget deficit in fiscal year 2020 of $3.1 trillion, or 14.9% GDP.
Biden's first major legislative response was the American Rescue Plan Act enacted in March 2021, a $1.9 trillion package that included $1,400 checks per adult, an expanded child tax credit for a year with $250–300 monthly checks per child expected to drastically reduce child poverty, extended unemployment benefits, and expanded eligibility for healthcare benefits, among others. The primary impact was in fiscal year (FY) 2021, with a smaller impact in FY 2022. No Republicans in the House of Representatives or the Senate voted for the Rescue Act.
Biden followed-up with the Infrastructure Investment and Jobs Act, signed into law in November 2021. It authorized infrastructure investment of $1 trillion total over a decade for roads, bridges, airports, sea ports, rail, broadband, water, and public transit, among others. CBO estimated the deficit impact at $250 billion total, as they considered prior infrastructure investment trends as a baseline for comparison. The law passed the Senate in bi-partisan fashion, 69–30.
Real GDP grew 5.9% during Biden's first year, the fastest rate since 1984. Amid record job creation, the unemployment rate fell at the fastest pace on record during Biden's first year, from 6.4% in January 2021 to 3.9% by December 2021. However, inflation significantly increased in 2021 relative to 2020 in the U.S. and Europe, attributed to factors such as strong consumer demand for goods (empowered by government relief programs), supply restrictions in port capacity and microchips, and lower 2020 prices.
Inflation was partially offset by strong wage growth; by one measure, worker wages and benefits increased at the fastest rate in at least 20 years. The administration noted that high inflation was also present in the Eurozone, Canada and the United Kingdom, though economists said the $5 trillion in government stimulus spending in the United States during 2020 and 2021 was disproportionately large compared to that of other countries and was a significant contributor to domestic inflation.
Despite the pandemic and inflation challenges, Bloomberg News reported in November 2021 that the S&P 500 stock market return of 37.4% in Biden's first year (measured from election day) was the highest of any modern president. The stock market gains and significant housing price increases contributed to record household net worth of $142 trillion by Q4 2021.
The budget deficit in fiscal year (FY) 2021, the last year budgeted by President Trump, was $2.8 trillion, down from $3.1 trillion in FY 2020.