The U.S. Department of the Treasury's Office of Economic Policy has released an analysis that underscores the significant recovery of the United States economy from the pandemic recession. This resurgence is attributed to President Biden’s policy agenda. The analysis highlights that under the Biden-Harris Administration, the U.S. has seen unparalleled growth and employment creation among advanced nations, successfully managed inflation, and achieved a "soft landing," contrary to many initial forecasts.
According to the Treasury, this recovery is notable for its inclusivity, benefiting rural communities, households of color, and traditionally neglected areas.
The release of this analysis precedes Secretary Yellen's scheduled remarks to the New York Association for Business Economics on January 15. She will discuss her time as Secretary of the Treasury, the economic policies under Biden-Harris leadership, and what she describes as a historic economic rebound from the pandemic.
Key points from the report reveal that forecasters in October 2020 expected long-term negative impacts on unemployment and GDP due to pandemic-induced shocks. However, by December 2021, unemployment had decreased significantly to 3.9%, and real GDP growth had returned to pre-pandemic levels by late 2021. Current data suggests inflation is nearing pre-pandemic rates while maintaining low unemployment levels.
The analysis argues against early-pandemic macroeconomic strategies aimed at reducing inflation which could have led to increased unemployment and economic hardships. Empirical models indicate that such policies might have resulted in unemployment rates rising between 10% and 14% during 2021-2022—translating into millions more jobless individuals.
Moving forward, macroeconomic policies should prioritize productivity growth through innovation and workforce investment according to this analysis. With stable unemployment and controlled inflation, policymakers are encouraged to invest in supply-side initiatives such as those outlined in recent legislative acts like the Bipartisan Infrastructure Law and CHIPS Act.
For more detailed insights into these findings, readers can access the full report online.
