The Economy And The Evidence

Nick Hanauer has long advocated for economic policies buttressed by something called “evidence.” I first encountered him when he was pointing out that putting disposable income into the hands of the working class via a higher minimum wage actually strengthens economic performance and supports job creation, because–duh–manufacturers don’t hire people to make widgets that few people have the means to buy.

Hanauer recently addressed “Bidenomics.”

When President Joe Biden first promised to “grow the economy from the bottom up and the middle out” through public investments, empowering workers, and promoting competition, critics scornfully derided his agenda as “Bidenomics.” And when the president defiantly embraced this epithet by making it the economic centerpiece of his reelection campaign, even some allies questioned the wisdom of stamping his name on an economic recovery that is as misunderstood as it is strong. Despite record-low unemployment, rising real wages, strong GDP growth, and a rapid fall in the inflation rate to below both global and historical averages, only 36 percent of Americans say they approve of Biden’s handling of the economy. Given such weak approval numbers, “Bidenomics” might at first appear to be an ill-advised slogan for a reelection campaign.

But to dismiss Bidenomics as mere sloganeering is to miss the point: The Biden Revolution is real, and running on Bidenomics is key, not just to winning reelection, but to winning the battle to establish a new consensus over how to manage and build our economy in the decades ahead.

As Hanauer explains, a large and thriving middle class is the primary engine of economic growth. That’s the core proposition of Bidenomics– that prosperity grows from the bottom up and the middle out. It challenges Reagan and the GOP’s belief in “trickle-down.”

All available evidence supports Hanauer and Biden.

A recent article in The Atlantic examined the reluctance to trust that evidence. The article asked why America abandoned the greatest economy in history, and the subhead suggested potential explanations: “Was the country’s turn toward free-market fundamentalism driven by race, class, or something else? Yes.”

From the 1940s through the ’70s, sometimes called the New Deal era, U.S. law and policy were engineered to ensure strong unions, high taxes on the rich, huge public investments, and an expanding social safety net. Inequality shrank as the economy boomed. But by the end of that period, the economy was faltering, and voters turned against the postwar consensus. Ronald Reagan took office promising to restore growth by paring back government, slashing taxes on the rich and corporations, and gutting business regulations and antitrust enforcement. The idea, famously, was that a rising tide would lift all boats. Instead, inequality soared while living standards stagnated and life expectancy fell behind that of peer countries. No other advanced economy pivoted quite as sharply to free-market economics as the United States, and none experienced as sharp a reversal in income, mobility, and public-health trends as America did. Today, a child born in Norway or the United Kingdom has a far better chance of outearning their parents than one born in the U.S.

The rest of the article considers three theories for why America abandoned New Deal economics: white backlash to civil-rights legislation, the Democratic Party’s “cultural elitism,” and/or global crises beyond any political party’s control. It concluded that all of them played a role.

Whatever the reason, Americans seem to have a very hard time accepting the fact that “Bidenomics”–which harks back to New Deal principles–has produced an economy better than anyone predicted.

Yet the economy is ending the year in a remarkably better position than almost anyone on Wall Street or in mainstream economics had predicted, having bested just about all expectations time and again. Inflation has dropped to 3.1 percent, from a peak of 9.1. The unemployment rate is at a hot 3.7 percent, and the economy grew at a healthy clip in the most recent quarter. The Fed is probably finished hiking interest rates and is eyeing cuts next year. Financial markets are at or near all-time highs, and the S&P 500 could hit a new record this week, too.

The GOP demanded reductions in government spending. The White House disagreed, arguing that funding programs on infrastructure, domestic semiconductor production and clean energy would help inflation by expanding the economy’s productive capacity. The White House was right.

I’m currently reading a book on Modern Monetary Theory, which makes a point that Biden clearly understands: national budgets are nothing like household budgets, and failure to understand the difference leads to bad policy.

More on that book–and that theory– later….


  1. Yesterday the Washington Post published a similar article yesterday. It looked at numerous elements but many consider the stock market an indicator of overall performance.

    I won’t go into each item analyzed but here is detail for one element on their stock price.

    The stock market rose rapidly during Trump’s presidency and has continued its ascent under Biden. After a period of slowing last year — in anticipation of higher borrowing costs and increased volatility — stock prices have picked back up on optimism that the Fed is done raising interest rates. The Dow Jones Industrial Average and the Nasdaq hit all-time highs this month, and the Standard & Poor’s 500 is on track to follow suit.
    Trump kept a close eye on the stock market’s path during his presidency, often taking to social media to flaunt his successes. He also warned Americans that a Biden presidency would result in a “stock market collapse the likes of which you’ve never had.”
    That has not happened — which the president was quick to note. “Good one, Donald,” Biden recently fired back on X.

  2. The rising Stock Market began under President Biden; that seems to be forgotten as the presidential poll numbers seem to favor Trump while blaming Biden for the imagined economy numbers work against Biden. That rising Stock Market means corporation’s profits are rising due to price increases over which presidents have no control. Just yesterday my visiting family and I got into a discussion about the economy; I drug out my carefully kept budget books from 1991 to this week; my income in 1991 was approximately $50 lower than my Social Security checks today. They couldn’t believe the prices on everything listed in my budget; my grandson is now spending approximately $200 weekly at the grocery store which totals about $50 monthly less than my working income in 1991. Is it the middle and older generations that are casting blame on President Biden for what they term the failing economy based on those long ago prices rather than the overall ability of paying today’s prices with today’s income? I got the biggest laugh with my story of yelling at the service station owner when gas went up to 50 cents per gallon.

    Today’s prices leave less for entertainment and extras, except for the wealthy, we could squeeze out of those long ago lower incomes but consider the change to this electronic age where spending is at our fingertips on some electronic marvel to make lives “easier”. I view it as mental laziness and loss of remembering the cost of those electronic marvels which are becoming more and more forced on us as the long ago predicted cashless/checkless economy, with banks controlling our personal economies. Those long ago prices are part of the “good old days” older generations speak of, forgetting the modernization of our day-to-day lives with automatic washers and dryers, microwave ovens and push-button products we are now geared to use as that is what is available today. Banks are closing which leaves fewer banks to increase their profit levels and also gain control of our personal spending…at a cost.

  3. Thanks for the good news. Sadly, what I see on TV is a brief mention of the good economic statistics followed by a longer display of how Joe Six Pack disapproves .
    More air time to Joe Six Pack than is given to the real good news. That makes me angry. WHY must they do that?

  4. Last night on CNN, they broadcast a movie-length documentary about the rise and fall of Rudy Giuliani. I’m not sure I would have chosen to watch it, but I did while doing other things.

    What it explained was Rudy’s rise and fall. But on top of that, what Trump learned from it while participating in Rudy’s fall. (As usual, Rudy was also actively participating in Rudy’s fall.) Both Republicans have the same makeup: an oversized ego, brains, and an instinct for showmanship.

    Of course, Trump hasn’t yet, but will surely fail in the future. Massively. With great fanfare.

    The only question is, what will tumble with him? The idea of democracy and, therefore, the free human race? Only these United States? Only some states? Only the Republican Party?


    But, what worries me, along with that load of concerned grandpa, is if Biden, at the age he is, is the most effective preventative.

    Again, IDK.

  5. Pete; are you familiar with that old adage, “Never change horses in mid-stream.”? I prefer the paraphrased version, “Never change streams in mid-horse.” Think about that one, they both fit this situations. Having worked in Indianapolis Republican City Government for 20 years, I watched as the change of candidates within the Republican party go from Lugar to Hudnut to Goldsmith; each one started their administration from scratch, their own staff, their own department and division heads, their own options for best use of tax dollars for the public. Or, as in the case of Goldsmith, the best use for his personal gain. The change from Mayor Bill Hudnut to Goldsmith was a precursor of watching the federal level go from President Barack Obama to “The Donald” and the downfall of the party plus the downfall of trust and faith in the United States by Americans and our foreign allies. The party upset regarding Manchin not running for office as a major loss should be viewed as an opportunity to find a much more qualified and loyal Democrat in West Virginia; it wouldn’t take much to find a more qualified Democrat in that beautiful state.

  6. It will be easier for me to accept the comment that inflation is lower, when our weekly price of groceries at the supermarket starts falling. So far, it has not.

    However, I will continue to be a staunch Democrat when I go to the polls.

  7. I wonder of those considered employed,how many of them are working two or more jobs?

    Without the aforementioned consideration,the Post article is useless.

    Bidenomics is working for someone. That someone doesn’t buy groceries.

  8. Here we go again with the stock market being the barometer for “the economy” in the minds of voters. Per CNBC: “The wealthiest 10% of American households now own 89% of all U.S. stocks”. While more Americans own stock than ever before, most is at the top. Stock prices are not your kitchen table talk in most houses (only in estates).

  9. Careful Sheila. Modern Monetary Theory is an enticing book by a writer who does not stress her conditions for its use. Inflation is still, as Uncle Milty taught us, a monetary phenomenon. Fearing a collapse in consumer spending, very well-meaning people flooded us with money. In most cases that was unnecessary. Biden has had the right approach in using fiscal policy (government spending) . Right now we still have too much money in the hands of consumers who buy Taylor “Barbie” Swift products, can afford to attend Pacers & Colts games, and do not give a hoot or a holler for storm sewers or education. Inflation is in decline, but inappropriate spending by consumers (and local governments) on entertainment undercuts real economic growth in which all can share.

  10. Everything is about 25% more expensive! We added $2 trillion in one tear to the nation’s debt.
    Evs are a bust! 2 wars brke out due to weakness starting with Afghanistan flop. All these things sre burdens in the economy all due to Biden.
    People have to work, does his policys match his slogans.
    Poor example of good governance.
    Reaparations for ghe black community is met by immigrants crossing over taking their jobs.
    Evidence is seen everywhere, and no one is blind except those sho want to be.

  11. WOW! What a display of distortions, half-truths, delusion (Ian) and fear today. It’s not only wrong to assume an economy’s health based entirely on the stock market, it’s wrong to blame ancient animosities on a single person – our elected leader and our well-being on declining inflation.

    The only FACT and TRUTH today has to do with the long-term damage Reagan/Republican operating schemes of Supply-side Economics. That wet dream/stillborn disaster from Milton Friedman was the playbook for runaway capitalism. As in the first sentence, the word “DUH” comes to mind for the middle-class and not 10% fools who swallowed that “shining beacon on the hill” bullshit. Trickled-down was EXACTLY what Marx was talking about when he predicted the demise of unregulated capitalism by its own hand.

    Is it any wonder that our health care and life styles are circling the drain? Why? Because if your sickness or enjoyment needs don’t make money for the 10%, it doesn’t happen.

    PEOPLE! Don’t you get it yet? Republicans/Reaganites don’t give a single damn about your health or how long you live or how much you enjoy what you have. It is, therefore, no wonder that our citizens have the least upward mobility of any industrialized nation. THAT WAS THE REAGAN/REGAN/FRIEDMAN PLAN ALL ALONG.

    Bidenomics is following the basic path of John Maynard Keynes, the same philosophy that helped pull us out of the Great Depression… even though Republicans hated every bit of it and fight it still. Their operating philosophy is so fundamentally corrupt and the minions of corporate/banking America who keep getting elected by the sheep keep helping to destroy our economics from within.

  12. The numbers Sheila reported are little out of date. Inflation is down to 2.6%. The real GDP is growing at 4.5%, almost 2% higher than it ever grew under Trump.

    I will say that the stock market is not the economy. It seemed to me that the only economic policy Trump had was to make sure the stock market did well, and I can tell you things are remarkably different today than they were 6 years ago. Today nobody is even talking about a $15 minimum wage because you can hire somebody for less than $15. Of the 48 countries that have a truly free market economy, we are ranked 38 in the lowest taxes. Republican tax cuts have shifted more wealth to the top 1% than anything else. If the US even came up to the Average of these 48 countries, we would be collecting trillions more dollars in taxes and nobody would even be talking about deficits. We need to kill the idea of trickle down. The last 40 years proves it doesn’t do what it’s promised it would.

    I will also say that JoAnn’s point about price increase really does weigh heavily on a lot of people. I heard that once prices stabilize, it takes about 3 years for the average person to accept the changes and stop looking for somebody to be angry at the changes. I would also like to point out in 1991, almost nobody owned anything larger than a 27” TV and for what you paid for a 27” TV then, will get you a 70” that uses 1/5 the electricity, and has 100 times the content delivery. LED light bulbs didn’t exist and heat pump technology was still a novelty, so my home energy costs have been stable for a long time, or even decreasing compared to inflation. Now my car gets 28 miles per gallon and goes 10,000 miles between required maintenance. In 1991, I think I was using 30% more gas, and was expected to change the oil every 2,500 miles. So are some things cheaper? Maybe. Are some things more expensive? Yes.

    But there are things that exist today that nobody dreamed of in 1991. I almost have the equivalent of that mythical Star Trek Communicator. I can literally say “Computer, tell me the fastest way to get to X” and I get step by step guidance. It turns out 85% off all American adults own a smart phone too.

    Back to Sheila’s point. The economy is doing amazingly well and at almost ALL levels and not just the stock market for the top 10%.

  13. I am happy to read some positive news this morning. Among other things I am wishful for is that the tide may be turning away from the gloom of impending disaster that is MAGA/Trump.
    In today’s “Chop Wood/Carry Water”, another newsletter I read and recommend, there is a long list of progress that has been made this year in a positive direction. If you want a lift I suggest checking it out, even just reading the headlines will give you a boost.
    Happy Holidays to all, however you celebrate. Here’s hoping for a better world in the New Year!

  14. I became a staunch Keynesian shortly after naming economics as my major before going to law school and that school of thought is all that we are seeing today in these boom times. Thus “economic growth” is the holy grail of all economists; the issue is how to fashion policy to accommodate such growth. Keynes said that capturing such holy objective was the result of aggregate demand, so fine, but how do we fashion policy to enhance aggregate demand? The answer is Bidenomics, or New Deal #2. No trickle down fixes need apply. Giving away money to corporations via tax cuts does nothing for demand and a lot for shareholder dividends, buybacks, and CEO compensation. Demand consists of consumption, which in turn depends upon ability to consume. Republicans with their trickle down complex are sending money to the wrong places.

    Aggregate demand depends upon the ability of the masses to afford to buy corporate widgets, and when they can, all profit. Tax cuts and dodges a la Reagan and Trump are unnecessary. Bottom lines of corporate donors are enhanced by business acumen in a competitive world full of buyers who have money in their collective pockets, and tax cuts to corporate donors which add to deficits our grandchildren will have to pay will become politically unpalatable.

    Economic growth is continuing apace today, albeit and as always unevenly, which gives rise to complaints such as those cited by Ian today, and why? Because certain costs are not subject to either New Deal or Bidenomics initiatives and corporate greed in cost-fixing becomes the order of the day. Ian and other boom-deniers are advised to name such greedhogs and not New Deal or Bidenomics as the culprits in this corporate wrongdoing, culprits who use “inflation costs” as a cover for their civic injustice.

    Numbers don’t lie, but some politicians do. We are in the midst of an economic boom and with wages up and unemployment down and the Fed’s signal that interest rates will be declining and the housing shortage, I look for a big increase in housing starts in the new year, among divers other areas that contribute to the Bidenomics Boom.

    Hang on to your hats.

  15. About EV vehicles being a bust, I have to disagree. I just purchased a plug-in hybrid. It’s not a full EV, since it only has a 40 mile battery range. About 98% of my driving is on battery and the electricity costs half what I spent on gas. The last time I had to fill up the tank was after a round trip from Indy to Chicago and I still got something like 35mpg.

    I was just talking to a guy that did buy a full EV. He has to take it in every 2 years or 20,000 miles for maintenance. There are just no moving parts to break. So with the downsides, there are upsides.

    I suspect that the shift to EV is going to be one of those game changers, and it’s just going to take time. If this were 1923, and not 2023, I suspect the person complaining about EVs would be complaining about the switch from horses to cars.

  16. The key to people disbelieving the strength of the economy can be seen in these posts. The worldwide spike in inflation–some of which was definitely caused by supply chain and other pandemic-related issues, but a very large and infuriating chunk was caused by gouging and other predatory capitalist practices–has led to higher costs for staple items like groceries and gas. It’s painful for average people to go out and buy necessities. And those prices are not likely to drop. Ever.

    That simple fact hides everything else. One key item it obscures is to imagine the economy if it had been left in Trumps’ hands for the last three years. You certainly wouldn’t be beating the rest of the world in recovery and inflation.

    That said, I think the Fed’s interest rate hikes have been entirely misguided. Typically, one does that to slow an economy, to stifle inflation caused by an overheated economy. That’s _not_ what was causing the inflation, so it was the application of a “solution” to a problem that didn’t exist. Their behaviour has slowed the recovery, I think.

    For me, the interesting questions always surround _why_ the GOP and conservatives are so invested in their particular set of economic policies. There are some obvious reasons, many of which get discussed regularly on this blog. I guess it’s not the endpoint that interests me most, though, but rather the process that leads people to develop those proclivities. Ultimately, I want to think about how to undermine those devastating processes for the betterment of us all, including those damn rightwingers, too. 🙂

  17. If the idea was correct, Bidenomics, why didnt the white house mention who has what,and why? the billionaire class stagnated the blue collars and economic growth since reagan. the idea of price control was never mentioned,as is,why,we have propagated a nation of the rich,and how they have come to power. ALEC and the such, has been a raging bull for the chosen few, without regard to the other 99%. whats wrong with just a middle class lifestyle without the BS of whos got what. instead as you surf in internet wonder and tube, the endless,mind you endless commercials on satilite or social Ms. each with a get better or get rich end sale. lawyer barking too suit all and pharma telling you its such a better world under some elixer. since covid, and i believe, the retaliation of the contract rich,who has contrated thier net worth for profit,becoming a senile slave holder against its employees,wages yea, but,by selling what they need to maintain a decent lifestyle while ignoring the bottom third as lazys. .. the profits gained from that latest inflation was just a reminder who runs the game. either way, wages may incure a decent living,but the real issue is the deliberate denial of how its further taken from our pockets. we need a price control, windfall profits tax, and tax what is hoarded by the rich,denying the money there to a local economy for its own growth.. wall street and diamon eyes baby… the stock market is due to hit a new high, big deal, who get 92% of those stock diveys, the 10% on top.
    nothin like firehosen money into a few pockets. we need a real deal…

  18. Maurya
    The book Sheila is reading is “The Deficit Myth ” by Stephanie Kelton. I know because I was present when it was given to her.

    Basically the book points out that the so-called “public debt” (Federal) really is the governments investment in the country. It isn’t something that has to be paid back in the future, although it will be. The problem is that paying it back involves taxing the money out of the economy (dis-investmet which is bad for the economy), or paying off the bond holders with new money (i.e. without issuing new bonds). The federal government has the legal authority to do that because the Constitution specifically says that it does, but it will require Congress to take action, which won’t happen with the GOP in control. Even then, it will be necessary to take the action over time to prevent runaway inflation.

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