WASHINGTON – President Joe Biden has inherited a badly damaged economy pulverized by the pandemic, with 10 million fewer jobs than a year ago and as many as 1 in 6 small businesses shut down.
Yet there are also signs of resilience and recovery that suggest the prospect of a rebound, perhaps a robust one, by the second half of his first year in office. Despite the bleakness of the economic landscape, Biden by most accounts faces a less daunting challenge than he confronted as vice president under Barack Obama more than a decade ago in the depths of the Great Recession.
Biden last week proposed a $1.9 trillion plan to end what he called “a crisis of deep human suffering.” Here is a closer look at the economy the president is confronting:
JOBS: The nation has regained more than half the 22 million jobs that were lost to the pandemic in March and April. But hiring has weakened for six straight months. In December, it actually turned negative, with the loss of 140,000 jobs.
The number of unemployed who say their job losses are permanent – and therefore unlikely to return even when the economy rebounds – has jumped to 3.4 million, more than double the pre-pandemic level. But the number fell in December and is little changed from August. By comparison, permanent job losses peaked at 6.8 million in 2008 and 2009.
CONSUMERS: The raging pandemic took a fresh toll on the economy over the holiday shopping season, with sales at retail stores falling for three months in a row. Sales at restaurants and bars tumbled 4.5% in December and collapsed by one-fifth for 2020 as a whole.
There are early signs, though, that $600 checks for most Americans that were authorized in last month's rescue aid package are beginning to boost spending.
MANUFACTURING: Though factory output is still recovering from the initial pandemic-induced shutdowns, for once the nation's manufacturing workers aren't among the worst-hit. Manufacturing output rose 0.9% last month, its eighth straight increase. And factories have added jobs for eight months.
FEDERAL RESERVE: One more potential tailwind for the Biden economy is a Federal Reserve that has made clear that it plans to keep its benchmark short-term interest rate pegged near zero through at least 2023.
Chair Jerome Powell has also said the Fed will keep buying $120 billion in bonds a month until there is “substantial further improvement” in the economy, which most economists expect will last into 2022. The Fed's bond purchases are intended to keep long-term loan rates low to spur borrowing and spending.