Snapshots of the Biden Economy

Plus, time to change the definition of full vaccination ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ [The Fisc](   By Yuval Rosenberg and Michael Rainey Happy Monday! It’s been a relatively quiet day on the fiscal front as [tensions with Russia]( volatility in the [stock market]( and the [continuing fallout]( from the big lie about the 2020 election dominated headlines — along with some debate about the [NFL’s overtime rules]( prompted by the wild finish to the Chiefs-Bills playoff game. We’ll be keeping an eye out this week for any signs of progress on lawmakers’ effort to finalize a fiscal year 2022 government funding deal and any signs of life for Democrats’ stalled Build Back Better bill. In the meantime, here’s what else is going on … and remember to check your spam folder once in a while. You never know [what you’ll find](. Charts of the Day: Snapshots of the Biden Economy The U.S. economy is sending some powerfully mixed signals at the start of the new year, with inflation running hot even as another wave of the coronavirus sweeps through the country, likely slowing the recovery. This trio of charts from Timothy B. Lee and Alan Cole of [Full Stack Economics]( provides a look at some of the dynamics involved in this topsy-turvy moment. First, a look at the effects of the unprecedented emergency spending by the federal government. As Congress pumped trillions of dollars into the economy with relief bills in December 2020 and March 2021, both incomes and consumption returned to their pre-pandemic trends. “To see how remarkable that is, compare it to the previous economic recovery,” Lee and Cole say. “In 2008, both personal incomes and expenditures fell way behind the pre-2007 trend and never caught back up.” Second, a look at how quickly the recession moved. The first few months of the pandemic saw record job losses, with more than 10% of prime age workers (25 to 54 years old) losing their jobs. But thanks in large part to federal spending, things turned around quickly and employment is expected to reach pre-pandemic levels this year. “For comparison, it took 12 years after the Great Recession for prime-age employment to return to 2007 levels,” Lee and Cole write. Third, a look at one of the key changes that occurred during the pandemic. With millions of people stuck at home, spending on durable goods soared as spending on services like dining and entertainment fell. Combined with extensive problems in the supply chain, the increased demand for durable goods sent prices rocketing higher — a reversal of a decades-long trend that helped push inflation to levels not seen since the early 1980s. “This is one reason that many economists don’t expect last year’s high 7 percent inflation rate to last much longer,” Lee and Cole write. “Durable goods are traded in a global market, so if American consumers’ demand for cars and washing machines continues to outstrip supply, foreign companies like Samsung and Ikea will gladly supply more.” Still, it’s not clear that inflation is finished with the economy quite yet. The analysts note that prices are starting to rise in the service sector, which could keep the inflationary pressure going, since in a service economy like the U.S., “even small changes in the average price of services has a significant impact on the overall cost of living.” Financial Aid to Poor Mothers Improves Children’s Brain Function: Study Giving low-income mothers cash stipends during the first year after they give birth has a positive effect on their children’s brain function, according to a study published Monday in the Proceedings of the National Academies of Sciences. The findings could play a role in the current debate over the size and scope of the social safety net, including President Joe Biden’s effort to expand the child tax credit, Jason DeParle of The New York Times [said]( “This is a big scientific finding,” Martha J. Farah, a neuroscientist at the University of Pennsylvania, told DeParle. “It’s proof that just giving the families more money, even a modest amount of more money, leads to better brain development.” DeParle noted that the effects measured in the study were relatively modest and that more research is needed before clear conclusions can be made. “It’s potentially a groundbreaking study,” said Charles A. Nelson III of Harvard, a consultant on the study. “If I was a policymaker, I’d pay attention to this, but it would be premature of me to pass a bill that gives every family $300 a month.” Column of the Day: It’s Time to Change the Official Definition of Full Vaccination We told you last week about a trio of studies from the Centers for Disease Control and Prevention that found that booster shots were [highly effective]( at preventing Covid hospitalizations and reducing symptomatic infections. Dr. Leana S. Wen, a professor at George Washington University's Milken Institute School of Public Health and columnist for The Washington Post, writes that the studies show that it’s time for a stronger national push to get the public booster shots: “Unfortunately, [less than half]( of Americans eligible to receive boosters have done so. Even among adults 65 years and older, more than 36 percent have not been boosted. While three-quarters of the total population have received at least one dose of the vaccine, only one in four are vaccinated and boosted. “Months of mixed messaging are largely to blame. … To start, it’s well past time for the FDA and CDC to change the definition of the coronavirus vaccine to three doses of the Pfizer and Moderna shots (Johnson & Johnson recipients should receive at least two doses). … Changing the official definition will compel institutions with vaccine mandates to require the additional dose. … In addition, federal health agencies should incentivize doctors’ offices and pharmacies to call their patients who have not yet been boosted. Providers should communicate as much urgency to boost the vaccinated as they have to vaccinate the unvaccinated.” [Read the full piece at The Washington Post.]( Send your feedback to yrosenberg@thefiscaltimes.com. And please tell your friends they can [sign up here]( for their own copy of this newsletter. News - [Restaurants Ask Congress for More Aid as Omicron Ravages Industry]( – The Hill - [‘That Raise Meant Nothing’: Inflation Is Wiping Out Pay Increases for Most Americans]( – Washington Post - [Omicron’s Economic Toll: Missing Workers, More Uncertainty and Higher Inflation (Maybe)]( – New York Times - [Omicron’s Spread Could End ‘Emergency Phase’ of Pandemic, Top W.H.O. Official Says]( – New York Times - [Fauci Optimistic Omicron Will Peak in February]( – ABC News - [Lab Study Shows Omicron-Blocking Antibodies Persist Four Months After a Pfizer-BioNTech Booster]( – Washington Post - [FDA Expected to Sharply Restrict Use of Two Monoclonal Antibodies, Spurring a Halt in Federal Shipments of the Covid-19 Treatments]( – Washington Post - [US Pharmacies Are Rolling Out Free N95 Masks as Free Covid-19 Tests Begin to Arrive in the Mail]( – CNN Views and Analysis - [President Biden’s Economy Is Failing the Big Mac Test]( – New York Times Editorial Board - [Republicans Are Embarrassed to Tell Us What They Are For]( – Jennifer Rubin, Washington Post - [Biden's Year Two Won't Be About Bipartisanship]( – Amie Parnes and Morgan Chalfant, The Hill - [Four Ways Inflation Is a Political Problem for Biden]( – Olivier Knox, Washington Post - [Inflation Forecasting Is a Truly Dismal Science]( – Stephen Mihm, Bloomberg - [Infrastructure Week, But for the Pandemic]( – Matthew Yglesias, Bloomberg - [Four Things Experts Say the Biden Administration Can Do to Rein in the Pandemic]( – Theodoric Meyer and Jacqueline Alemany, Washington Post - [How Did We Fail So Badly? Emily Oster and Ashish Jha on America’s Covid Response]( – Kara Swisher, New York Times (podcast) Copyright © 2020 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website or through Facebook. The Fiscal Times, 399 Park Avenue, 14th Floor, New York, NY 10022, United States Want to change how you receive these emails? [Update your preferences]( or [unsubscribe](