Business
Column: Voters are finally noticing that Bidenomics is working
The turning point in Americans’ perception of the economy — that despite months of doom-colored predictions of a looming recession — may have occurred on Jan. 25.
That was the day that Fox Business economic commentator Larry Kudlow, a former official in the Trump White House and consistent dispenser of grim economic predictions during President Biden’s term, went on Fox’s “America Reports” telecast and acknowledged that the Biden economy was, you know, good.
That day, government figures had been released showing a 3.3% annual increase in the gross domestic product for the fourth quarter of 2023, on top of a 4.9% growth rate for the third quarter.
Instead of contracting, the economy has continued to grow….Inflation has come down significantly. …The labor market is healthy.
— Treasury Secretary Janet Yellen
Candidly, if a bit glumly, Kudlow stated, “It was a good quarter, don’t get me wrong, and the last quarter was a good quarter, 4.9.” Biden, he said, “gets his due. If I were he, I’d be out slinging that hash too, no problem.” Asked by the host if this meant that the economy was not as bad as he had been saying, he answered, “I would say, probably, I would agree.”
Fox being Fox, Kudlow couldn’t resist sticking the shiv in: “Wages are rising more slowly than prices,” he said, which doesn’t happen to be true: Wages and benefits for rank-and-file workers have grown faster than prices throughout the post-pandemic period.
The bottom line, however, is that if the bad-economy camp has lost even Larry Kudlow, they’re on the wrong side of the argument.
The truth is that the Biden economy (“Bidenomics,” if you prefer) has been chugging along for some time. The fundamental question that has circulated about his record is not about the economy’s strength, but about why he hasn’t gotten credit for it.
Sentiment may now finally be shifting. In January, the University of Michigan saw the largest two-month jump in its consumer sentiment index since the end of the Gulf War in 1991. News coverage, which throughout 2023 relentlessly forecast a recession, now touts the prospect of a “soft landing” — that is, a successful battle against inflation without an increase in the unemployment rate or a general economic slowdown.
As it happens, some news outlets seem reluctant to give up on the old theme. “A soft landing, for now,” was Politico’s headline on a mid-December roundup of economic statistics including unemployment below 4% and inflation having been brought down to 3%.
But even White House aides, who last year were reported to be uneasy at trumpeting the term “Bidenomics” in the president’s reelection campaign, are now reported to be hoping that “a strong economy will sell itself to Americans,” according to NBC News.
Administration officials have been trying to spread the word. “Instead of contracting, the economy has continued to grow,” Treasury Secretary Janet Yellen told the Economic Club of Chicago on Jan. 25. “It now produces far more goods and services than it did before the pandemic. … Inflation has come down significantly. … The labor market is healthy.” The unemployment rate, she noted, “has been below 4% for 23 months now, a stretch that has not been seen during the last 50 years.”
Moreover, Yellen said, the current recovery has been “the fairest recovery on record,” with wage and employment gains for the middle class and demographic groups such as Black and Hispanic workers. And the U.S. recovery from the pandemic has outstripped those of other developed countries: “The increase in real wages is unique to our country’s recovery: in other economies, real wages have declined since 2019.”
Hourly earnings growth for rank-and-file workers (blue line) has exceeded inflation (red line) since the onset of the pandemic in March 2020. Gray stripe signifies a recession.
(Bureau of Labor Statistics)
Unionized workers have been among the leading beneficiaries of economic growth, achieving strong improvements in wages and working conditions at unionized auto plants and United Parcel Service.
Some economic commentators have been perplexed at Americans’ failure to recognize the good news about the Biden economy. “Something weird is happening in America,” John Burn-Murdoch of the Financial Times observed on Dec. 1.
Even though GDP growth for the third quarter had just been pegged at higher than 4.9% and job growth remained strong, Burn-Murdoch wrote, “the public is up in arms about economic conditions, with consumer confidence dropping to a six-month low. There really is no pleasing some people.”
The disconnect should not have been so mysterious, however. As I’ve noted in the past, changes in economic conditions, especially improvements, often take time — even many months — to filter into public awareness. People will typically think that a recession is still in full cry long after a recovery is underway.
This happens partly because the news media keep projecting gloom, because bad news always sells better than good news and no reporters want to get caught out as Pollyannas if conditions worsen again.
Marketers of economic nostrums such as cryptocurrency and gold investments flood the airwaves with come-ons, and they don’t win customers by proclaiming that sunny days lie ahead. Opposition politicians don’t win votes by praising incumbents for implementing effective economic policies.
Nor are opinion polls the best way to gauge people’s feelings about the economy; polls consistently show Americans to be discontented with economic policies, but their spending shows them to be profoundly optimistic. That said, the public’s feelings about the economy are often tempered by the fear that things could turn down again in the blink of an eye.
One source of confusion about economic affairs is that public perceptions of the economy are generally snapshots of longer-term trends, and are therefore inevitably distorting. Professionals aren’t immune from the same error.
Federal Reserve and Treasury officials have been consistently pilloried for wrongly predicting that the inflation that emerged in late 2020 would be “transitory.” Indeed, the Fed, smarting from this criticism, arguably has kept interest rates high for longer than has been warranted.
Yet, viewing things in a rearview mirror, team transitory was right. As Kevin Drum has observed, the painful inflationary era of the 1970s and 1980s — which peaked at an annualized 12% in 1974 — actually began in the late 1960s, when the annual rate first exceeded 5%, and persisted into the 1990s, when the rate fell below 3%. That’s more than two decades. (The measure at issue is personal consumption expenditures excluding food and energy, the Fed’s preferred metric of overall inflation.)
By contrast, the recent bout of inflation that supposedly is a black mark against the Biden administration began in mid-2020 (under Trump), peaked at an annualized 6% at the beginning of 2022, and has now fallen to 2%. The period of high inflation lasted less than three years, and never came close to the 1970s peak. In other words, it was the definition of “transitory.” Yet people remember it as a long stretch of relentless price increases.
People also imagine inflation today to be as high as it was in 2022, yielding persistently high prices. But they may not yet have fully recognized the extent to which overall inflation has moderated or that some prices are coming down.
The average gasoline price nationwide is $3.15 per gallon of regular, down from the peak of $4.54 reached in mid-June 2022, according to the AAA; across the Midwest, average prices have fallen below $3 per gallon. Prices of staple foods, many proteins and vegetables are falling.
In political terms, the economy is a moving target. There is always something for naysayers and pessimists to point at to make the case that all is not well. The generally good news in job growth, with the blowout report of 353,000 new jobs in January and months of gains in manufacturing, is confounded by employment bloodbaths among tech and media firms.
But there’s certainly a case to be made that Biden has been an effective steward of the U.S. economy — and one who has succeeded in pushing to favor ordinary Americans through initiatives such as infrastructure spending. That’s a big change from Trump, whose most significant economic achievement was an enormous tax cut for corporations and the wealthy.
Despite all that, opinion polls show that Biden still gets low marks for his management of the economy. But recognition of the truth may soon come his way.
Dear Mr. Pelley:
I meant what I said in my letter last week to the 60 Minutes team: joining 60 Minutes is the honor of my career and I am grateful to be working alongside the people who have contributed to the most important television journalism brand this country has ever produced. While I’m new to 60 Minutes, I’ve devoted my career to investigative journalism and storytelling. I started this job excited to collaborate and to benefit from the wisdom and experience of the 60 Minutes veterans, with you among them. For that reason, one of the first things I did in my new role was call you to talk and invite you to dinner. It is a profound disappointment that you rejected that overture and chose ambush instead. Yesterday, you hijacked my first meeting with staff to disparage me, my qualifications, and my intentions with remarkable incivility and contempt. I welcome a diversity of viewpoints and respectful debate among the team, but this was nothing of the sort. Yesterday’s performative display of hostility enacted in front of the staff instead of in a civil, private conversation-demonstrated that you have no interest in contributing to the future success of the show, or approaching my new tenure with a mind open to collaboration and progress. I am here to deliver first-in-class news programming, not to make headlines about newsroom drama. I am eager to work alongside those who share this goal.
Despite yesterday’s misconduct, I had hoped that in sitting down with you today we could find a path forward together. You made clear that you are not interested in such a path.
Your antipathy to the future of the show has come through loud and clear. And I have heard you. I therefore write on behalf of CBS News, Inc. (“CBS”) to inform you that your employment with CBS is terminated for cause effective immediately. Enclosed is your formal termination letter.
Sincerely,
Nick Bilton
Executive Producer, 60 Minutes
The co-founder of Aspiration, Joseph Sanberg, was sentenced to 14 years in prison on Monday after defrauding investors and lenders of over $248 million.
The startup, an eco-friendly digital banking company boasting fossil fuel-free investments, carbon offsets for gas purchases, and a debit card with cash-back benefits for shopping at clean companies, was founded by Sanberg and Andrei Cherny. Cherny left the company in 2022 and has not been charged.
Sanberg, an Orange County native, pleaded guilty to wire fraud in October after being arrested in March last year. Aspiration subsequently filed for bankruptcy and liquidated all of its assets by July.
Sanberg and venture capitalist Ibrahim AlHusseini, who also faces charges, together forged a series of bank statements in order to obtain loans. From 2020 to 2021, the pair forged AlHusseini’s bank statements to show millions of dollars in assets in order to obtain millions of dollars from lenders.
Additionally, they forged a letter from their audit committee stating that $250 million in funds were available, when in reality Aspiration had less than $1 million. The amount of loans defrauded exceeded $248 million.
In 2021, Sanberg artificially inflated Aspiration’s 2021 revenue by $44 million by recruiting 27 fake customers to sign letters of intent pledging tens of thousands of dollars per month for tree planting services. Sanberg himself funded the contracts and used the inflated revenue numbers to obtain more loans.
The charges sparked an NBA investigation into salary cap allegations due to Aspiration’s connections with Clippers owner Steve Ballmer.
Ballmer personally invested $60 million in Aspiration, all of which was lost. He is now the target of a civil lawsuit alleging his participation in the scheme. Ballmer denies the allegations.
The team announced a $300-million sponsorship deal with Aspiration, and Clippers player Kawhi Leonard signed a four-year, $28-million marketing contract with the company, which reportedly performed no duties. The issue has raised concerns about how players are circumventing the NBA’s salary cap.
The team lost the $300-million sponsorship deal and an additional $20 million paid for carbon offset purchases.
Residents in the city of Monterey Park will be the first in the nation to vote on a permanent ban on data centers Tuesday.
If approved, Measure NDC would prohibit data centers within the city limits and could only be overturned by another vote.
Yard signs saying “No Data Center” in English and Chinese with images of dragons line sidewalks in the San Gabriel Valley city.
As a wave of data center opposition sweeps the country, numerous towns and counties across the U.S. have instituted temporary moratoria and other restrictions on the facilities. But only a handful have instituted indefinite bans, and just four other towns have sent related matters to the ballot.
Supporters are hoping the vote will set a precedent for the rest of the region, where residents are fighting proposals in Vernon and City of Industry.
“This is about as permanent a ban as we can get,” said Steven Kung, co-founder of the group No Data Center Monterey Park. “Winning Measure NDC would send a huge message to the rest of the San Gabriel Valley about how residents don’t want data centers.”
The ballot measure emerged from the fight against a 247,000-square-foot center proposed in 2024 by the Australian-owned investment firm HMC StratCap for a residential area in Monterey Park.
The facility would have sat less than 500 feet away from the nearest home and used three times the electricity of the 60,000-person, predominantly Asian American city.
While the developer touted the potential for jobs and tax revenue, residents expressed concerns about noise and air pollution, rising electricity rates and a potential to lower property values.
The company pulled its plans in late March following public outcry and a March 4 city council vote to extend a temporary data center moratorium and place a ban on Tuesday’s ballot.
In a letter to the city council, HMC StratCap said it would pursue a different use for the land and would not engage in a ballot measure fight.
The city council later banned data centers indefinitely, the first in California to do so, said Mayor Elizabeth Yang. But she’s still been out campaigning for the measure with all four other council members.
“If a council puts in an ordinance, a future council can reverse it too,” said Yang. “With the ballot measure, unbanning it is a lot harder because you need the entire city to vote on it.”
The measure proposes the ban “to protect air quality, drinking water resources, and public health” and “prevent impacts to electricity and water rates.”
While California places third in the country for existing data centers with about 300 facilities, it hasn’t been a hot spot in the recent AI-driven data center boom. High electricity rates, expensive land and regulatory hurdles mean that fewer, and smaller, facilities are currently planned than in Virginia, Texas, Georgia, Illinois or Arizona.
“Most of California’s data centers are small by today’s standards,” said Shaolei Ren, an engineering professor at UC Riverside who studies how to reduce the environmental impacts of data centers. “Ten years ago, they would be medium-sized, but the power demand for new AI data centers has increased a lot.”
The average operating data center demands 45 megawatts, according to the Washington Post, while the average planned one would draw 430 MW. The one proposed for Monterey Park would have required about 50 MW at peak demand.
As proposals crop up in SoCal, they’re met with fierce opposition. Montebello, El Monte and Baldwin Park have all enacted temporary moratoria, and Alhambra recently banned data centers as part of a zoning code update. City of Industry, Vernon, City of Commerce and Santa Fe Springs are moving in the other direction, trying to court developers and streamline data center approvals. Community groups are fighting that.
Outside the San Gabriel Valley, residents of Coachella and Imperial County are showing up in droves to protest local proposals.
Matthew Shaw, a volunteer with the Coalition for Responsible Data Center Development, who recently published a report on opposition to AI data centers, said a vote to ban them in Monterey Park “would lead to copycats, partially because so many groups are just opposed to any data center development at all.”
While there is no formal opposition to Measure NDC, some building trades like Ironworker Local 433 supported the Monterey Park data center when it was still live before city council. Those in the data center industry are lamenting the state of public opinion.
“These are multi-billion-dollar assets that are built by multi-trillion-dollar companies. These things will get done,” said Mehdi Paryavi, chairman of the International Data Center Authority. “My biggest problem is that our industry does not invest enough in community engagement.”
Paryavi said towns that seek to limit data centers are missing out on thousands of jobs generated by data center construction, operations and customers, as well as faster artificial intelligence speeds and better performance.
Kung said local community organizers are “looking at the empirical evidence” and seeing a ban as a win.
“We’ve never seen a city that embraces a data center and is like, ‘Look how our quality of life has increased, look how all the revenue has gone into citywide improvements,’” he said. “That just doesn’t exist.”
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