The stock market during President Biden’s first 100 days in office has outperformed every one of his predecessors going back 80 years, adding yet another notable data point to what’s been dubbed the “Biden boom.”
The Wall Street surge is expected to translate into economic gains as well, with analysts forecasting the fastest pace of gross domestic product (GDP) growth since the Reagan era as the coronavirus-ravaged labor market begins to heal and the country moves closer to fully reopening.
The strengthening economy, fueled by a turbo-charged vaccination campaign and $1.9 trillion stimulus bill, is boosting Biden’s political capital heading into policy fights over his multi-trillion dollar spending plans on infrastructure and families.
“The economy is looking fantastic. It’s probably going to be the best year of GDP growth in three decades,” said Dan North, Senior Economist at Euler Hermes North America Insurance Co.
And voters of all stripes are taking notice, said John Leer, an economist with the polling firm Morning Consult.
“What we have seen since Biden took office is that consumer confidence has consistently increased over that period of time,” he said. “That increase in confidence is occurring not only among Democrats, but among Republicans.”
Congressional Democrats are now seizing on the chance to link the widespread economic optimism to their legislative agenda, and they’re hoping to gain ground on an issue that’s often dominated by Republicans.
“After one of the most difficult years in the recent memory, the first 100 days of the Biden presidency and the new Senate Democratic Majority has seen the country turn a corner,” Senate Majority Leader Charles Schumer (D-N.Y.) said Tuesday.
The booming economy comes despite numerous warnings from former President Trump during the 2020 campaign that markets would tank if Biden were to win.
“With Joe Hiden’ it would crash,” Trump tweeted in September as the Dow Jones Industrial Average crossed 29,000. It is now hovering around 34,000.
While many economists credit Biden with successfully scaling up the U.S. vaccination campaign and quickly pushing a COVID-19 relief bill through Congress, North noted that the president had some luck along the way.
Biden came into office with two safe, effective vaccines that already had emergency approval, with a rollout underway. Additionally, the post-holiday spike in COVID-19 cases was beginning to recede by Inauguration Day, when funds from a coronavirus-relief bill just a few weeks earlier were making their way into the economy.
“He’s really come in with a huge tailwind, riding a wave of a lot of stimulus,” said North.
But with every boom comes the threat of an eventual bust. A stalled economy would likely hamper Biden’s agenda, and potentially carry electoral implications heading into the 2022 midterms.
“To me, the biggest risk is COVID. They’ve had these really big resurgences in Europe. That is a big risk if the trends here reverse,” North said.
In the U.S., vaccine hesitancy poses an obstacle. And public health officials worry about the possibility of a vaccine-resistant strain of COVID-19.
For some economists, the Biden economy could be a victim of its own success.
Larry Summers, a former Treasury Secretary and prominent Democratic economist, has warned that the flood of fiscal and monetary stimulus will result in persistent inflation, which could upend the growth trajectory and lead to higher interest rates that in turn could prompt another recession.
“We were providing demand well in excess over the next couple of years of any plausible estimate of the economy’s potential to produce, and that meant substantial price increases,” Summers said last week. “All the signs are for inflation starting to break out.”
The economy still has a long way to go before it reaches full recovery, particularly as millions remain unemployed.
Even as weekly jobless claims have fallen significantly — reaching pandemic-era lows in each of the past two weeks — 17 million Americans are without any employment.
Recent polling suggests Biden might not need to rely solely on the strength of the economy to accomplish some of his top priorities.
“When you talk to people about building the roads, bridges, broadband–these are safety issues, water supply, et cetera, and health issues, as well, it’s vastly popular in a bipartisan way,” Speaker Nancy Pelosi (D-Calif.) said earlier in April.
A recent Monmouth poll found 68 percent supported the $2.3 trillion infrastructure plan, and 64 percent support the families plan he’s set to formally unveil Wednesday evening before his first address to Congress. Similar numbers support his plan to tax corporations and the wealthy to pay for those proposals.
“The Biden administration’s presumption that spending programs are popular is borne out by these poll numbers,” said Monmouth University Polling Institute Director Patrick Murray
“The key to maintaining this level of support is whether Americans can point to direct benefits in their own lives once those plans are put into action.”
Still, polling numbers and an accelerating economy aren’t what will get Biden’s policies through Congress.
He must still contend with Republicans, who want to dramatically scale back the infrastructure plans and set aside some of the broader social benefits he’s proposing.
Without their support, Democrats can only pass whatever the Senate parliamentarian deems permissible under the arcane budget reconciliation rules that would allow Democrats to sidestep a GOP filibuster.
Biden must also ensure progressives such as Sen. Bernie Sanders (I-Vt.) and centrists such as Sen. Joe Manchin (D-W.Va.) are willing to back the same legislation.
But the strong economy and popular voter support can’t hurt, and the Biden team has taken every opportunity to remind their political rivals of that.
“These polls show what we have long known: that the president came into office at one of the most divisive moments in modern American history and the president’s focus is on fulfilling his promise to bring the country together,” White House press secretary Jen Psaki said Monday.
“On delivering on the things the American people elected him to do, we have seen broad approval for getting the pandemic under control, turning our economy around, especially for working families and the middle class,” she said.