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An economist explains what the data says about how the U.S. economy is doing


President Biden talked up his economic agenda - what his administration has termed Bidenomics - at a community college in Maryland last week.


PRESIDENT JOE BIDEN: A higher share of working-age Americans are on the workforce now than any time in the past 20 years. And job satisfaction is higher than it's been 36 years - for 36 years. And we're growing the economy.

RASCOE: It was another attempt by the president to tout the positive economic changes the country has seen under his administration. To see what an economist makes of Biden's argument and what the White House has accomplished, we called up Betsey Stevenson. She's a professor of economics and public policy at the University of Michigan and was the chief economist in the Labor Department under President Obama. She joins us now. Welcome to the program.

BETSEY STEVENSON: Hi. It's great to talk to you.

RASCOE: How would you characterize the strength of the economy right now?

STEVENSON: What President Biden has just highlighted is that a higher share of working-age people are working than at any other time in the past, and that's really nothing short of a miracle. If you had told me in 2020 that we would see not only a full recovery of labor force participation, but one that even exceeded where we had been, I would have thought that that was a real long shot. If you go back to thinking about what should the Fed have done, and did the Fed need to be worried about inflation? - a lot of what they were trying to think about is, will people come back into the labor force? And do we need to worry about prematurely cooling down the economy and preventing that labor market recovery? - because this labor market recovery is what gets us back to our overall economic potential.

RASCOE: But there has been pain, and that was in inflation. New data last week showed inflation ticked up a bit in August. The Federal Reserve hasn't taken another hike in interest rates off the table yet. Mortgage rates are still high if anybody's in the home-buying market. Are we still on precarious footing?

STEVENSON: I think the Fed's been pretty good overall at getting inflation down in a way that we haven't seen that kind of, you know, wage price spiral take off. But it's not going to be a smooth path. There's going to be some bumps like what we saw last month. I just want to be clear. Like, inflation is terrible, and nobody likes it. You've got, you know, your paycheck, and then, all of a sudden, it's not buying you as much stuff as you thought it was going to buy you. I have to say, though, a little bit of inflation - it's painful, but it's spreading that pain over lots and lots of people. This is really hard for President Biden because that's got all the people grumbling about him. But what it's really avoided is the pain of unemployment, which really hits a smaller group of people but extremely hard.

RASCOE: But when it comes to the idea of a recession or the looming shadow of a recession, are we past that, or is that still something that could, you know, be around the corner?

STEVENSON: There's always a threat of a recession, but what I know is it doesn't feel like we're in any kind of extra-risky period of time for a recession right now. Growth remains pretty strong. Unemployment remains quite low. And even if we saw a further slowdown of the economy, it could slow, and we still wouldn't be in recession territory where growth is actually turning negative. Some of this is really about the way people responded to the pandemic. They built up a lot of savings. And, you know, the pandemic has started to recede. Consumer spending has been incredibly strong, and that strong consumer spending is what's fueled our ongoing economic growth. It's also actually, though, what's fueled inflation. And so it's got - it's like a double-edged sword.

RASCOE: I want to ask you about this disconnect that we've been seeing for a while now. If people feel bad about the economy, does that mean that the economy is bad?

STEVENSON: I think we've just been in a period where there's been so much change. And difference and change is so hard, and then you've got these higher prices, and you've got different ways people work. And then we've got this younger generation coming up behind us who want things very differently. And I think that that feeling of being unsettled is real. The economy's changing, and there's lots of reasons to feel nervous and worried. But there's been tremendous gains. You know, we've seen a world in which the wages at the bottom have risen much faster than the wages at the top. And that wage compression, that narrowing of the gap between the haves and the have-nots - and certainly President Biden would like you to think that's all due to Bidenomics. It's also due just to this period of underlying change that we're in. So there's a lot of good things that are coming about because of it, but there's some scary things. Nobody really likes feeling unsettled.

RASCOE: That's Betsey Stevenson. She is a professor of economics and public policy at the University of Michigan. Thank you for being here.

STEVENSON: Thank you. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Ayesha Rascoe is a White House correspondent for NPR. She is currently covering her third presidential administration. Rascoe's White House coverage has included a number of high profile foreign trips, including President Trump's 2019 summit with North Korean leader Kim Jong Un in Hanoi, Vietnam, and President Obama's final NATO summit in Warsaw, Poland in 2016. As a part of the White House team, she's also a regular on the NPR Politics Podcast.

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