According to one of the Joe Biden’s former top economic aides, the President-elect and his economic team will face “three different eras with the economy” in the administration’s early years.
Ben Harris served as the top economic aide to the then-vice president from 2014 to 2017. He is currently a professor at Northwestern University’s Kellogg School of Management but has maintained influence in Biden’s orbit and reportedly helped spread the President-elect’s message to the business world. The New York Times even recently called him the “Quiet Architect of Biden’s Plan to Rescue the Economy.”
In an interview with Yahoo Finance Live on Thursday, Harris outlined a “painful” first half of 2021, then a “big bounce back” in the second half of the year.
Then, we “will settle into this long run” in 2022 and beyond, Harris said. That era is where Harris appears to be putting his focus.
‘The shackles of 2% growth’
The first two “eras” are largely being determined right now, said Harris. Washington lawmakers appear close to a stimulus deal to help individuals and businesses get through the months ahead before a vaccine can be widely distributed. The approval and distribution of vaccines will then help set up bounce-back in economic activity in the second half of next year.
“There was an enormous amount of savings in the second and third quarter of 2020 in part because people didn't spend their stimulus checks, and in part, because they had nowhere to spend their money,” Harris said.
What happens in the third era – in 2022 and beyond – is what will fall squarely on Biden’s shoulders, he said. Specifically, whether the President-elect can deliver on some of his big campaign promises.
“When President-elect Biden laid out his campaign agenda, a big part about that was getting us out of, sort of the shackles of 2% growth, and putting forward a big pro-growth plan” Harris says.
The rate of GDP growth between the Great Recession of 2007-2009 and the current pandemic – spanning the administrations of both President Obama and President Trump – has been relatively consistent. Growth was somewhere between 2.9% and 1.5% every year in that span.
Harris outlined the big elements of Biden’s “Build Back Better” agenda as key for transforming the U.S. economy once the pandemic is in the rear-view mirror.
“We just have to decide if Congress wants to come together and actually pass a big infrastructure package or address childcare or address access to capital for businesses,” he said. “That's really a 2022 question.”
Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.