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White House anticipates more economic hardship and tough mid-term fight

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WASHINGTON – White House officials, now predicting that parts of the economy could continue to struggle for months to come, are looking for ways to rule out a potential threat to the Democratic outlook in the 2022 election.

While the economy has improved dramatically since President Joe Biden’s first days in office, a second month of slower-than-expected hiring led the president and senior administration officials to acknowledge last week that the recovery had not gone as quickly as they would like. , and that inflation and labor shortages could continue for months.

That leaves the White House to contemplate the prospect of a slower economic recovery for the remainder of Biden’s first year – and into 2022. To deliver a message in the coming months, administration officials plan to highlight any positive points they can find, such as rising wages. and the pace of economic growth, and use the weak spots to bolster their argument as to why Congress should pass a $ 3.5 trillion spending bill, according to a person close to the White House.

Recent figures leave the White House to contemplate the prospect of a slowing economic recovery for the remainder of President Joe Biden’s first year.Matthew Hatcher / Bloomberg via Getty Images

White House officials also plan to continue their vaccination efforts in the hopes that more workplace mandates will encourage people to return to the workplace in the coming months, the person said. To show he is working to address product shortages due in part to bottlenecks at major shipping ports, Biden will meet with shipping officials and officials at Walmart, UPS and Home Depot on Wednesday.

The prospect of a sluggish economy by 2022 prompts Democratic strategists to prepare for what this might mean for their prospects in the midterm elections. Republicans say they plan to seize weak spots in the economy, hoping to link inflation and worker shortages to Biden’s policies, as part of their pitch to voters.

“If people pay more for everything and prices skyrocket more than wages, that’s a powerful campaign message for Republicans halfway through,” said a chief of staff to a House Republican . “When the average American pays more for gas and groceries under a Democratic-controlled government, that’s something Republicans can use.”

The latest economic figures add to a list of setbacks the president has faced in recent months. Biden entered in August with the United States creating nearly a million jobs in July, Covid-19 deaths near their lowest point and the Senate close to an agreement on an infrastructure package of $ 550 billion. But two months later, the country is adding only a fraction of that number of jobs, with nearly 2,000 people, most of them unvaccinated, one day dying of Covid, and the infrastructure bill is in. deadlock in Congress.

Amid internal unrest, Biden has also come under fire in the past two months for his handling of the withdrawal of US troops from Afghanistan and responding to an influx of migrants to the southern border.

These problems seem to weigh on his poll numbers. Only 38% of people approved of the work Biden was doing, the lowest score he has received since taking office, according to a Quinnipiac poll released last week. Regarding the economy, only 2% of respondents rated the economy as “excellent” and 27% as “good” while 69% said the economy was “not so good” or “bad,” the poll found.

White House officials believe passing two spending laws – the $ 550 billion infrastructure bill and the $ 3.5 trillion social safety net bill – will give Democrats a crucial platform to run in 2022 despite economic headwinds that could exist next year, a person familiar with the White House strategy said.

The White House believes the bills could also solve some of the short-term problems in the economy, such as providing childcare and elderly care to get people back into the workforce, the person said. Both pieces of legislation, however, are stuck in Congress amid Democratic wrangling over which programs should be included, how they should be paid for, and how high the price should be.

“The economy is a big sore point for the White House,” said a Democratic strategist close to the administration. “I think that’s why they’re relying so hard on this infrastructure bill, they think the investment will be good for the economy, and I think that’s why they’ve been so optimistic in matters of expenditure. “

The White House last week sought to highlight the positives in the September jobs report released on Friday, which showed the United States created 194,000 jobs in that month, up from 500,000 according to the estimate. Dow Jones.

In remarks after the employment figures were released, Biden pointed to a drop in the unemployment rate, an increase in wages and the rate of growth during his presidency. He also wished to highlight the nearly 5 million jobs created since taking office.

But at the same time as the White House talked about the economic progress being made, it also used areas of weakness to explain why Congress must pass Biden’s spending bills. Following last week’s jobs report, Biden argued that the economy was on a stable path, while acknowledging that it was not recovering as quickly as he would like.

“In fact, we are making real progress,” he said. “Maybe it doesn’t feel fast enough, I would like to see it faster and we’re going to make it faster, maybe it doesn’t sound dramatic enough. But I too would like, as I said, to go faster. However, we are making steady and steady progress.

Senior administration officials, including Treasury Secretary Janet Yellen, have predicted that consumers may continue to see higher prices and product shortages for the rest of the year as the market continues to function through supply chain bottlenecks and labor shortages. Inflation is running at a rate of 3.6% year-on-year, a 30-year high, according to the Federal Reserve’s preferred measure of inflation.

“Supply bottlenecks have developed and caused inflation,” she said in an interview with CNBC last week. “I think they’re transient, but that doesn’t mean they’re going to go away in the next few months.”

White House officials said they believe a key factor in getting Americans back into the workforce and dealing with the labor shortages businesses face is rising vaccination rates . Officials have said they hope an upcoming Labor Department requirement that large companies ensure their workers are vaccinated or regularly tested will further boost that, but that employer’s requirement is likely weeks away. before being implemented, according to someone familiar with the process.

Another factor that could change the course of the economy over the next few months is whether the Federal Reserve decides to start withdrawing aid provided by the central bank, which would cause interest rates to rise. Federal Reserve Chairman Jerome Powell has indicated that will happen before the end of the year, although lower-than-expected employment figures on Friday could affect the move.

In the meantime, Republicans say they plan to stay focused on weak spots in the economy as they push for the 2022 midterms.

“There are a number of issues voters care about when they walk into the voting booth, the state of the economy is still # 1,” said Dan Eberhart, a major Republican donor and CEO of an energy company. “Biden is trying to blame Republicans for the downward spiral in the economy, but it’s not going to fly.”

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