As Donald Trump prepares to return to the White House, Democrats are licking their wounds—and, inevitably, fighting among themselves. Kamala Harris’s decisive but narrow loss has nearly everyone searching for an answer for what happened, and many are offering up the thesis that if she had just championed their pet policy, she would have won. It is clear that when voters headed to the polls, the economy was top of mind, and Trump’s victory and numerous exit polls indicate that they gave it bad marks.
Voters around the world have been furious about post-pandemic inflation, and at the polls, with few exceptions, have accordingly punished incumbent leaders. Americans have plenty of other reasons not to feel economically stable. In recent years, poverty has risen as government benefits have been pared back, leading to a growing sense of economic precarity. Many Americans have spent down their pandemic-era savings buffers and have little to catch them if they fall on tough times.
All of that is real. Just as real, however, is the data showing that the post-pandemic economy is not only remarkably strong, it’s even stronger than it was before Covid hit. At this juncture, it’s impossible to know exactly why it was that some Americans decided to switch their vote to Trump or to sit the election out entirely. No one can yet say for sure why such a strong economy led to a definitive loss for the sitting administration. But however voters felt about President Joe Biden and Vice President Harris’s management of inflation—or immigration, or crime, or anything else—the fact remains that the administration oversaw an incredible economic recovery and then kept it going. None of that would have been possible without the Biden administration’s embrace of novel economic policy, now known as “Bidenomics.”
By nearly every metric, Bidenomics was a roaring success. It would be a mistake to ignore or forget the lessons that can be gleaned from the administration’s robust economic policy. Their present discontent notwithstanding, Americans will undoubtedly miss this economy when it’s gone.
The seeds of Bidenomics were planted in 2009 when Jared Bernstein, the current chair of the White House Council of Economic Advisers, or CEA, was hired as the chief economist to then-Vice President Biden. “Our first conversation was about this, and it never left me,” Bernstein recalled. Biden’s economic worldview, as he put it that day, was: “If you’re helping to bake the pie, you ought to get a fair slice.” That’s the heart of Bidenomics, Bernstein said. “The fact is that almost every program and policy that we have promoted can find a connection to that assertion.”
More than a decade later, Biden’s approach hadn’t changed much. “Bidenomics is about building an economy from the middle out and the bottom up, not the top down,” the president said at a 2023 speech in Chicago. He pointed to empowering American workers, promoting competition in private markets, and investing in key domestic industries.
Worker empowerment requires a strong economy, in other words—a point Biden well understood. Early in his administration, in a speech about the American Rescue Plan, a $1.9 trillion legislative package aimed at recovering from Covid, he used the term “full employment” five times. The repetition was no accident: He was calling for a swift return of lost jobs so that anyone who wanted to be employed could find work. Full employment unleashes lots of other positive developments: more bargaining power for workers, higher wages, and better opportunities for groups that face hiring discrimination. Full employment is, in effect, one of the best ways to wrest more pie back for the bakers.
Another way is to encourage unionization. While running for president, he promised to be “the most pro-union president you’ve ever seen,” and in many ways he’s lived up to his own hype. He installed pro-union officials at the National Labor Relations Board who have overseen an aggressive rethinking of the agency’s laws, leading to a doubling of unionization petitions between 2021 and 2024.
Biden also aggressively cracked down on consolidation and corporate power. He put Lina Khan—a young legal scholar whose antitrust work had already made waves—in charge of the Federal Trade Commission. His administration went after junk fees and deceptive practices and encouraged governmental departments to consider how to make markets fairer and more competitive.
Lindsay Owens, executive director of the economic think tank the Groundwork Collaborative, sees Bidenomics as a direct repudiation not just of the tepid federal response to the Great Recession, but of the neoliberal policies that have guided Washington’s thinking for decades and informed how banks were regulated, markets were policed, and the government intervened in the economy. Bidenomics, Owens said, is “a forceful instance of a shifting economic trend,” a realization that prevailing policy “was failing the average American.” Biden embraced big government spending in crises, and the idea that “power matters in the economy.” If corporations have too much—or workers too little—the government should intervene.
The Biden administration did intervene. The strong economy and tight labor markets that Biden has overseen have dealt workers their best hand in decades. Biden wasn’t going to let an anemic recovery drip on miserably for years; he and his team had witnessed the recovery from the Great Recession and seen the negative consequences of the government being too timid in its response. “It was clear that we allowed people to languish in unemployment for far too long, and there was long-term scarring,” said Heather Boushey, a member of Biden’s CEA. “One of the things I’m most proud of in this administration is we did not allow that to fester, because we know that that destroys lives,” Boushey said.
The American Rescue Plan got just 50 votes in the Senate, with all Republicans voting against it, and Vice President Harris casting the tie-breaking vote. Biden “had almost no votes to spare,” pointed out Dean Baker, senior economist at the Center for Economic Policy Research. But he “stuck by it and pushed it through.”
Shortly after the plan passed, job growth reversed its recent deceleration. The unemployment rate sank below 4 percent in February 2022 and stayed below that rate for 27 consecutive months, the longest stretch since the 1960s. Without government spending, Moody’s estimated that in 2021 a recession would have destroyed the economy once again. Poverty would have risen, and wage growth would have fallen to an all-time low. Instead, the poverty rate fell in 2020 and 2021, when it was the lowest ever recorded.
The economic gains also didn’t just get skimmed off the top by the wealthiest, as has happened in recent recessions. Wages for those earning the least rose 7.8 percent from early 2020 to mid-2023, reducing inequality for the first time in decades.
But inflation, a global phenomenon caused by supply chains still creaking under the chaos of the pandemic and an energy market roiled by the war in Ukraine, stole the show. “Inflation was caused because demand came back stronger and faster than supply, and inflation went down because supply eventually caught up,” when supply chains ironed themselves out, said Betsey Stevenson, an economics professor at the University of Michigan. There was, moreover, little correlation between how much countries spent and how much inflation they saw.
Even so, when prices started to rise, there were immediate, loud calls—from both outsiders like former Treasury Secretary Larry Summers and insiders like Federal Reserve Chairman Jerome Powell—that a recession could be necessary to tame inflation. And yet the Biden administration proved that inflation could be conquered without mass misery. Although we experienced inflation on par with other developed countries, “ours came down way less painfully, and we had amazing economic growth,” Stevenson said. Still, rising prices did stymie other economic programs that likely would have accelerated growth further. Biden’s sweeping Build Back Better agenda—which would have invested in things like paid leave, childcare, housing, and health care—was thwarted by a few holdouts in his own party, notably Senator Joe Manchin, who used inflation fears as cover for their opposition.
But Biden scored wins in what his team has called industrial policy at a crucial time when the economy might have started to slow as stimulus wore off. The Infrastructure Investment and Jobs Act, signed into law in November 2021, funneled $1.2 trillion to rebuilding roads, bridges, and drinking water systems. In August 2022, he signed the CHIPS and Science Act, which spent over $50 billion to spur domestic development of semiconductor technology, and, a few days later, the Inflation Reduction Act, which invested $499 billion to address climate change and health care. “The industrial policy has really helped to keep this economic activity going,” Bernstein said.
After that funding started to hit, there was a boom in money spent on construction in the manufacturing sector, reaching more than triple the rate seen in the previous decade. Construction employment has followed, adding 670,000 jobs since 2021. There has also been a sustained surge in new business applications, likely in part because all the money being invested in domestic industries “creates a lot of incentives for people to expand existing companies and for new companies to form,” Stevenson said.
“It’s very clear,” Baker said, that these government investments have kept the economy humming. Today’s economy is remarkably strong. GDP has risen 12.6 percent over Biden’s tenure, far outpacing both predictions made even before Covid became a household name and growth in other advanced countries. Income and wage growth has managed to stay ahead of inflation, allowing Americans to keep their financial heads above water. That has not been the case in other developed countries. The unemployment rate is still a low 4.2 percent. The strong economic performance, Boushey argues, “really does validate a middle-out and bottom-up economics approach.”
That healthy economy is essentially Donald Trump’s to screw up. If he doesn’t, Democrats will face a similar situation to the one they did during his first term, when he trumpeted a roaring economy built by his predecessor for years—before the pandemic, and his mishandling of the crisis, destroyed it. But letting the economy flourish on its own is not what he’s promised to do. He probably will mess it up—either via an authoritarian deportation program that decimates labor markets, an aggressive tariff plan that spikes prices, or regressive tax cuts paired with deep spending cuts. When he does, Democrats should remember that they already have an economic plan that works.
