President-elect Joe Biden overcame President Trump’s attempt to ride a record economic rebound to reelection, as voters showed more concern for the troubled economy’s future than appreciation for its pre-coronavirus past.
Biden triumphed in a protracted contest despite recent signs of economic improvement and the president’s insistence that he could “make America great again” if voters gave him the chance. The Democrat chided Trump for not agreeing with House Democrats on a new economic relief deal, thus leaving the economy vulnerable to a winter swoon.
On Saturday, the former vice president for the first time publicly claimed victory in a televised speech and called for the country to come together.
“The people of this nation have spoken. They have delivered us a clear victory,” Biden said, adding that he would “rebuild the backbone of this nation, the middle class.”
After a historic second-quarter plunge as the pandemic froze most commercial activity, output rose by a record 7.4 percent in the three months that ended Sept. 30.
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Today’s 6.9 percent jobless rate also is much lower than the double-digit figure many Wall Street economists predicted earlier this year when the recession began. And on Monday, a key gauge of manufacturing strength rose to its highest mark in more than two years.
“Despite signs of an improving economy, the biggest issue was Donald Trump’s handling of covid-19,” said Greg Valliere, chief U.S. policy strategist for AGF Investments. “The economy is important, but covid-19 is more important.”
Biden’s U.S.-focused economic agenda contrasted sharply with Trump’s ‘America First’ plan
Biden’s proposals would touch most corners of the U.S. economy. He plans to incentivize companies to bring manufacturing jobs back to the United States, to raise taxes on corporations and on individuals making more than $400,000 a year, and to fund job-creating infrastructure investments, including in universal broadband. Biden also favors another round of emergency assistance to American households and businesses battered by the pandemic.
Implementing his most ambitious proposals — such as a public option for health insurance — could prove difficult if Republicans retain control of the Senate following two January runoff elections in Georgia.
During the campaign, Trump sought to remind voters of the full-employment prosperity that he had delivered before the pandemic. The stock market by mid-August had risen 50 percent from its March lows, completing the fastest rebound from a bear market in U.S. history.
The president also presided over a nearly $3 trillion federal response to the economic collapse, which helped millions of suddenly jobless workers and provided businesses with forgivable loans to support them until the emergency passed.
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But as the year wore on — and coronavirus cases surged across much of the country — voters concluded there would be no lasting recovery until the pandemic was contained. With the president failing to mount an effective strategy — and publicly disparaging his top health officials — his polling advantage on economic issues collapsed.
In March, voters said they trusted Trump over Biden to handle the economy by a margin of 50 percent to 42 percent, according to an ABC News-Washington Post poll. But in the same survey last month, the two candidates were essentially tied on that score.
“While the economic recovery has been swift, it’s been incomplete, with millions still unemployed and pessimistic about the outlook,” said Tony Fratto, who was deputy press secretary for President George W. Bush. “But more importantly, the president’s mishandling of the pandemic overwhelmed any benefit from the economic rebound.”
The economy’s initial bounceback also is losing steam. On Friday, the Labor Department said the number of new jobs fell for the fourth straight month. More than 21 million Americans are receiving some form of unemployment benefits.
The economy’s continued healing is threatened by the failure of the administration and Congress to agree on additional financial support after months of fruitless negotiations.
Amid signs of softer demand, major employers recently announced fresh layoffs. ExxonMobil is cutting 15,000 jobs and Boeing is trimming its payroll by 7,000 after letting tens of thousands of workers go earlier this year.
Recent coronavirus outbreaks in rural states that had largely escaped the pandemic’s first wave, coupled with a resurgence of cases elsewhere, left much of the country braced for a difficult winter.
“No incumbent has kept the White House in a year where there was a recession and 10 percent-plus stock-market decline since 1952. It seems that President Trump’s reelection fell prey to a pandemic, muddled messaging and complex global challenges,” said Michael Farr, chief executive officer of Farr, Miller & Washington, an investment firm.
As the campaign neared its end, the president reprised the language of his 2016 win by attacking Biden as “a globalist” who had helped send American jobs offshore.
“He shuttered your steel mills, annihilated your coal jobs, and supported every disastrous trade deal for half a century,” the president tweeted on Monday, citing the North American Free Trade deal and China’s entry into the World Trade Organization.
But the president’s multi-front trade war also carried costs: It enveloped much of the manufacturing sector in a fog of uncertainty, complicating investment decisions and defeating his hopes of a lasting increase in blue-collar employment.
As Trump confronts the prospect of leaving office, 8.6 percent of the nation’s labor force is engaged in manufacturing, almost identical to the 8.5 percent in January 2017. And nearly 4 million fewer Americans are working today than when he took office.
“Trade war and tariffs reversed much of Trump’s first two years in economic growth,” David Kotok, chief investment officer for Cumberland Advisors, wrote in an email.
Trump’s trade war also may have hurt him in the politically crucial industrial Midwest. States that rely on imported parts from China, such as Michigan, were especially hit hard by the tariffs on Chinese products that the president imposed in 2018, according to a new study by the Federal Reserve Bank of St. Louis.
Trump inherited an economy that had been steadily growing for more than seven years. The unemployment rate dropped from 10 percent in October 2009 in the wake of the global financial crisis to 4.7 percent at the end of 2016.
The president secured congressional approval of a $1.7 trillion tax cut and slashed regulations to stimulate growth. That temporarily spurred the economy, driving the jobless rate to a half-century low of 3.5 percent in February.
But the economy’s long-term performance was little changed even before the pandemic hit. The United States grew at an average annual rate of 2.5 percent during Trump’s first three years, almost identical to the 2.4 percent pace during President Barack Obama’s final 36 months.
“The economy was in pretty good shape when Trump came into office and continued along its prior path – right up until the pandemic,” Barry Ritholtz, a New York investment manager, wrote in an email. “The Trump Economy is hard to distinguish from the Obama Economy.”