It’s a low point of Joe Biden’s presidency, with inflation, a COVID resurgence and Democratic flailing in Congress dragging his approval rating down to a measly 41%. Conventional wisdom holds that Biden’s weak standing will cost Democrats control of the House and maybe the Senate in the November midterm elections.
It’s not all bad news, however. Full-year GDP growth for 2021 came in at 5.7%, following a drop of 3.4% in 2020. That allows Biden to say he reversed the damage from President Trump’s last year in office to register the strongest economic growth since 1984. The unemployment rate, at 3.9%, is once again approaching the record low of 3.5% that occurred just before the coronavirus pandemic exploded in early 2020. Unemployment could reach that level, or even go lower, within the first half of 2022.
Intel’s (INTC) recent announcement that it plans to build a $20 billion semiconductor factory in Ohio is the kind of big corporate investment any president would crow about. That project will generate more than 10,000 jobs and bolster U.S. manufacturing of a key technological asset. General Motors (GM) just said it will spend $7 billion in Michigan—its single biggest investment ever—to build new battery-production facilities for electric vehicles. That will generate 4,000 jobs, and do it without any of the incentives for EVs Biden wants Congress to pass as part of his moribund “build back better” legislation.
U.S. President Joe Biden reacts to questions about U.S. Supreme Court Justice Stephen Breyer after it was reported Breyer will retire at the end of the court's current term, as he hosts chief executives of major U.S. companies at the White House in Washington, U.S., January 26, 2022. REUTERS/Kevin Lamarque ·Kevin Lamarque / reuters
The upcoming retirement of Supreme Court Justice Stephen Breyer also gives Biden a chance to energize his otherwise fractious party with a rockstar selection to the high court. Since Breyer is a liberal, Biden won’t be able to alter the court’s 6-3 conservative majority. But appointing a Black woman, as Biden has pledged to do, would fulfill a campaign promise and give party liberals who are otherwise frustrated with a stalemated Democratic agenda something to cheer.
There’s also new evidence that for all the drama over workplace vaccine requirements and on-and-off office re-openings, employees are getting more comfortable with work in the age of COVID. New polling of more than 10,000 workers by the Future Forum, a research consortium sponsored by Slack and other businesses, finds that workers feel substantially better off than they did a year ago. More than half of those respondents say they’re now working in “hybrid” arrangements combining work in an office with work from home, and 68% say they prefer that type of setup.
During the last year, Future Forum researchers have been rating survey participants on eight measures of their working experience, with improvements in every area. The biggest gains during the last 12 months have come in work-life balance, productivity, a sense of belonging at work and job-related stress. Overall satisfaction has also risen substantially. The survey included workers in six countries—the United States, Australia, France, Germany, Japan and the UK—with about half of those being American. Yet “U.S. workers are feeling the most positive about their working lives,” according to the January report.
[Has your work life gotten better or worse during the last year? We'd love to hear about it.]
The Future Forum research targeted white-collar “knowledge workers,” such as those in tech, data and service firms. Blue-collar workers and others with lower incomes may be feeling more of a pinch as inflation erodes wage gains. The University of Michigan’s consumer sentiment index is even lower now, for instance, than it was at the outset of the COVID pandemic in March of 2020. That’s probably because of inflation. Economist Ryan Sweet of Moody’s Analytics points out that the Michigan index is highly sensitive to gasoline prices and personal finance. The Conference Board confidence index, by contrast, focuses more on the labor market, and that index is substantially higher than it was at the start of the pandemic.
Source: Moody's Analytics, The Conference Board, University of Michigan ·Source: Moody's Analytics, The Conference Board, University of Michigan
Put it all together, and what Biden needs to rebound from low polling numbers is time. The Future Forum surveys show that businesses and their workers are both adapting effectively to challenges posed by COVID. If or when COVID finally recedes and there’s something like a return to normal, changes in work habits could produce long-standing improvements in labor-force productivity and workplace morale.
Intel’s investment in Ohio won’t bring new chips online until 2025 at the earliest, so it won’t help alleviate the current chip shortage. But construction will begin this year and the project is the type of marquis investment any president would tout as evidence of a U.S. manufacturing resurgence. A few more deals like this would give Biden a credible claim to revival of the heartland.
Spending from the infrastructure bill Biden signed in January will also start to ramp up in 2022, giving Biden real projects to claim credit for. Most states, meanwhile, are flush with cash, thanks to the rapid economic recovery fueled by fiscal and monetary stimulus, and billions in aid from Washington. Some of those states are planning tax cuts that will leave families with a little extra take-home pay.
That leaves inflation as the biggest wild card. There are still reasons to think the current 7% level of annualized price increases will abate. Much of that is due to crimped supply chains and a surge in demand for goods as COVID-fearing consumers retreat from services. If COVID ever recedes, spending will return to traditional patterns and demand for goods will ease, which ought to lower prices. If Biden catches a break, this will start to happen within a few months, with inflation dropping as a voter concern as the November midterms approach. No president, however, should count on luck to drive his success.
