Bidenomics Is Working for the Middle Class - Janet Yellen
The American economy has improved significantly over the past year, especially for the middle class. In December 2022, I shared my optimism in these pages about our country’s economic trajectory: We had gotten our economy back on its feet after weathering significant shocks and were poised for growth. It’s now clear that optimism was justified. While some forecasters predicted a 100% chance of recession this year, that didn’t happen. During the first three quarters of 2023, annualized growth averaged around 3%. Americans are applying to start businesses at a record pace, consumers are buying more, and inflation has come down substantially.
Historically, it’s rare to bring down inflation while maintaining a healthy labor market, but that’s what’s happened in the past year. The unemployment rate is near historic lows—at less than 4% for 22 months, the longest stretch in more than 50 years. Real wages have risen from their pre-pandemic levels—especially quickly for middle-income households. The typical middle-class American household has higher earnings, more wealth and more purchasing power than before the pandemic. Because wages have risen more than prices since 2019, a worker earning the median wage can today buy the same basket of goods and services as in 2019, with nearly $1,000 left over to save or spend.
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We recognize that middle-class Americans continue to face costly food and rent, which matters enormously to their budgets and daily lives. President Biden and I are focused on lowering prices where we can. The Biden administration has already capped insulin costs for Americans on Medicare at $35 a month and is lowering the price of prescription drugs for seniors and the cost of health insurance for millions of working families. Our clean-energy incentives are making it cheaper for Americans to upgrade their residential energy systems and will keep energy costs lower over time.
President Biden is also taking action to support the middle class through investments that will enhance the economy’s ability to produce and create good jobs. I call this strategy modern supply-side economics. The Infrastructure Investment and Jobs Act, the Chips and Science Act, and the Inflation Reduction Act are creating incentives for private-sector investment, with companies announcing more than $600 billion of investment in clean energy and manufacturing since the start of the administration. Recent Treasury analysis shows that funding from the bipartisan infrastructure law is going where it’s most needed—to states with the lowest-rated public infrastructure and lower median household incomes—not just to the coasts and wealthy communities. Since Congress passed the Inflation Reduction Act, 70% of investments in clean energy have been in counties where the employment rate is below average, and 86% have been in counties where college-graduation rates are below average. The law has created well-paying jobs for people and places that have historically been left behind.
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