Biden economy’s resilience fuels Democrats’ 2024 optimism

“The U.S. economy is on a very desirable path,” Treasury Secretary Janet L. Yellen told reporters at the Treasury Department on Wednesday. “And my expectation is, in spite of the fact that there are always risks, the economy is doing very, very well.”

Aiming to capitalize on the strong data, Yellen delivered a landmark address in Chicago on Thursday aimed at both defending the administration’s economic record thus far and beginning to outline its plans for a second-term agenda. In prepared remarks, Yellen rebuked the forecasters who “thought a recession last year was inevitable.” She also touted low gas prices, a jump in consumer sentiment, rising wealth relative to pre-pandemic levels, a decline in the gap between rural and urban unemployment, caps on some drug prices, and some other signs of economic improvement.

“It’s been the fairest recovery on record,” Yellen said, according to her prepared remarks. “The recovery we’ve had — instead of one that was weaker or less fair — meant that we avoided financial pain for most middle-class American families.”

Speaking in Wisconsin on Thursday, Biden similarly said: “I don’t want to bore you all with detail, but, you know, the experts, from the time I got elected, were insisting that a recession was just around the corner. Every month, there was going to be a recession. Well, you know, we’ve got really strong growth.”

The administration’s posture comes amid a broader rethinking of the politics of the U.S. economy, which once appeared to be former president Donald Trump’s most effective weapon in the 2024 presidential campaign. Although Republicans remain optimistic the economy is still a potent winning message — particularly given the administration’s initial attempts to downplay price hikes in 2021 and 2022 — the GOP’s economic case has certainly gotten more difficult, as inflation has fallen from around 9 percent to closer to 3 percent.

Some analysts stress that risks remain to the economy, and there is still a chance that inflation reaccelerates.

“There’s no question about it that the data at the end of this morning were fantastic. The economy has embarrassed people who have called for recessions, and it embarrassed people who called for an end to inflation too early,” said Stephen Miran, who served as an economic analyst at the Treasury Department in the Trump administration. “But it’s premature to be celebrating just yet — inflation risks are real, and recession risks are still real. It’s hard to imagine the economy can have tight labor and housing markets and not see real inflation risks.”

Still, the White House is also growing more assertive in its messaging on the economy. On Thursday, the White House Council of Economic Advisers released a report showing that the “blue chip” index of top economic forecasters had badly misjudged the direction of the economy, projecting much higher inflation and unemployment than turned out to be the case.

“The data tell a compelling story of an economy that has significantly defied expectations, and where persistently tight labor markets and easing price pressures are supporting macroeconomic growth,” the report stated.