When President Joe Biden signed the American Rescue Plan into law in March 2021, U.S. gross domestic product had increased for three quarters straight, and the unemployment rate had decreased nearly nine percentage points from its pandemic peak.
But at a fundraising reception on Sept. 13, Biden wrongly credited the Democratic COVID-19 relief bill enacted during the first months of his administration with rescuing a U.S. economy “in decline.” Economists told FactCheck.org that the weakened economy actually was “growing,” albeit at a “slower pace,” before the legislation became law.
Also, as of August, the unemployment rate was 3.7%, up 0.2 percentage points from 3.5% in July — which was the lowest it had been since February 2020, when it also was 3.5%.
However, in White House remarks the same day, Biden misleadingly claimed that the unemployment rate last month was “nearly a 50-year low in our country.”
Biden talked about the U.S. recovery from the COVID-19-caused economic collapse at a reception hosted by the Democratic National Committee. According to a White House transcript of his remarks, the president said: “I’ve stuck to what I said I was going to try to do from the American Rescue Plan, which we got passed without a single Republican vote in February, which literally turned the economy from one that was in decline to one that’s in recovery.”
The final version of the American Rescue Plan passed in the House and Senate in early March 2021, and Biden signed it into law on March 11. Only Democrats and independents voted in favor of the legislation, which included an estimated $1.8 trillion in additional spending to aid the nation’s economic recovery, such as $1,400 direct payments to eligible individuals.
The rescue plan, or ARP, followed two other major relief bills, the $1.7 trillion Coronavirus Aid, Relief, and Economic Security Act and about $900 billion for COVID-19 in the Consolidated Appropriations Act – both of which were enacted under former President Donald Trump in 2020. Those prior legislative efforts had already helped start the country’s economic comeback when Biden took office.
At the time the ARP became law, the economy certainly had not rebounded all the way back to pre-pandemic levels. It was still struggling, but the country’s fiscal status was improving, contrary to what Biden claimed.
For example, after two quarters of economic contraction at the start of the pandemic, the U.S. Bureau of Economic Analysis estimated that real GDP grew by 33.8% in the third quarter of 2020, 4.5% in the fourth quarter and then 6.3% in the first quarter of 2021.
In addition, the unemployment rate, which reached a pandemic high of 14.7% in April 2020, was down to 6% in March 2021, after declining for nearly 10 months consecutively.
Several economists also told us the economy was not in decline.
“The economy, as measured by GDP or any other conventional metrics, was clearly growing from April 2020 at least till the end of 2021,” Johns Hopkins University economist Jonathan Wright said in an email. “At first this was at a fast pace, and then a slower pace. I do not agree with the statement that the economy was in decline at the time that the ARP was passed.”
Steven Fazzari, an economist at Washington University in St. Louis, agreed.
“President Biden’s statement could be more carefully crafted,” he said in an email. “Taken literally, it is misleading. But I believe the broader implication is largely correct. The economy in early 2021 was growing, but from a very low level.”
“When the ARP was proposed, the economy had not yet recovered from the pandemic collapse,” Fazzari continued. “In the months following the ARP, GDP and job growth accelerated, speeding up the recovery.”
Wright also said that the “ARP boosted the economy,” which, in his words, “was operating at less than full potential at that time.”
The White House did not respond to our questions about Biden’s claim.
At times, the administration has highlighted a February analysis from Moody’s Analytics on global fiscal policy during the pandemic. That report projected that, if not for the ARP, the U.S. recovery would have taken longer, as the economy likely would have experienced a “double-digit recession” in the spring of 2021, leading to another increase in unemployment.
“The ARP is responsible for adding well over 4 million more jobs in 2021, and the economy is currently on track to recovering all the jobs lost in the pandemic by the second quarter of this year,” the report said. “If there had been no ARP, it would have taken another year for the economy to recover all of these jobs.”