2B — THE OBSERVER & BAKER CITY HERALD
THURSDAY, JANUARY 21, 2021
BUSINESS & AG LIFE
Biden’s test: Engineering economic boom in a partisan divide
By JOSH BOAK
AP Economics Writer
BALTIMORE — When Joe
Biden entered the White House
as vice president, the economy
was cratering. Job losses were
mounting. Stocks were crashing.
Millions of Americans were in the
early stages of losing their homes
to foreclosure as the housing
bubble burst.
Biden returns to the White
House as president a dozen years
later with the economy battered
and shaken by a pandemic. But
this time is different — and it
could reset the nation’s politics if
Biden and Democrats can count
on a level of growth not seen in a
generation.
Despite the 9.8 million jobs lost
due to the coronavirus, there are
signs the country is on the cusp
of a kind of boom unseen in the
Obama and Trump eras.
Checking account balances
have surged by $2.4 trillion
since the outbreak began. Home
prices are soaring because of hot
demand. And each additional
vaccination moves the world’s
largest economy closer to fully
re-opening.
“If the economy is improving
substantially by spring or early
summer, that might actually help
Biden get more of his agenda done
... because success can beget suc-
cess,” said Jason Furman, who
was top economist for the Obama
administration. He pointed to the
possibility of growth easing the
path for an infrastructure program
Patrick Semansky/AP Photo, Pool
Preparations are underway Monday, Jan., 18, 2021, at the U.S. Capitol
in Washington, D.C., to a dress rehearsal for the 59th inaugural cere-
mony for President-elect Joe Biden and Vice President-elect Kamala
Harris. A strong economy could help the new president push through
his agenda, but politics increasingly shape how Americans feel about
the economy.
and climate investments.
But hanging over any effort to
boost the economy is an enduring
partisan divide that contributed to
the deadly assault on the U.S. Cap-
itol this month as Biden’s Elec-
toral College victory was set to be
certifi ed. Politics is increasingly
shaping how Americans feel about
the economy, scrambling the polit-
ical incentives for lawmakers to
cooperate. There also are concerns
about whether the worsening pan-
demic and slow pace of vaccina-
tions thus far could portend more
serious problems on the corona-
virus front that could hurt the eco-
nomic recovery.
The potential for a boom
refl ects in large part the roughly
$4 trillion approved so far in fed-
eral aid, with Biden last week
proposing $1.9 trillion more, an
unprecedented level of stimulus.
The additional money, which
must be approved by Congress, is
intended to accelerate the vaccine
rollout, reopen schools and reduce
the child poverty rate to a historic
low.
The investment bank Goldman
Sachs estimates that growth this
year could be 6.6% if part of
Biden’s stimulus plan passes. That
would be the strongest gain since
1984, when a 7.2% increase in the
gross domestic product helped
carry Republican President Ronald
Reagan to a second term in a
landslide. Wells Fargo forecasts
growth of 4.6% this year, which
would be the best since 1999.
Still, there are plenty of eco-
nomic risks facing Biden. The
most bullish forecasts hinge
on getting much of Biden’s aid
package through Congress. And
any gains would probably depend
on overcoming the pandemic.
There is also the possibility that
the added stimulus championed
by Biden could be more than the
economy needs, perhaps stirring
infl ation.
But the Great Recession
taught Biden’s team the ben-
efi t of going big with stimulus.
Incoming White House Chief of
Staff Ron Klain says Biden’s offi -
cials learned the hard way that the
roughly $800 billion approved in
2009 to fi ght the Great Recession
was insuffi cient, a mistake they’re
unwilling to repeat this time.
“It wasn’t large enough,” Klain
said Friday at a livestreamed
Washington Post event. “Our
recovery lagged as a result.”
During the fi rst nine months
of the Obama presidency, the
unemployment rate climbed to
10% and the swift recovery that
was predicted never happened as
the country took years to work
through housing foreclosures and
rebuild its fi nancial system.
This left Obama administra-
tion offi cials having to argue that
the economy would have been
even worse without the stimulus.
Republicans countered that the
effort had fl opped as they won
control of the House in the 2010
midterm elections.
“There isn’t much doubt that
the economy did better in 2009
and 2010 because of the recovery
act,” said Douglas Elmendorf, who
was director of the Congressional
Budget Offi ce at the time and now
serves as dean of Harvard Uni-
versity’s Kennedy School. “Too
many people took the failure to
hit (stronger growth) as a sign that
the stimulus didn’t work, when, in
fact, the economy was worse off
than widely understood.”
Biden can count on backing
from Wall Street investors this
time to borrow. Helped by sup-
portive Federal Reserve policies,
low interest rates make it easier
to keep fi nancing a stimulus and
repay added debt. The interest rate
on a 10-year U.S. Treasury note
is about 1.15%, compared with
11.67% in 1984 when growth pros-
pects last looked this good and the
size of the federal debt was signifi -
cantly smaller.
Republican lawmakers still
see the need for more aid to con-
tain the pandemic, but some
are voicing concerns about
Biden’s desire for another big
spending package. They stress
that any new spending should be
directed toward increasing vac-
cinations and that his proposal
for direct checks of $1,400 per
person could delay people from
returning to work.
Craft smarter money goals in 2021
MILLENIAL MONEY
SEAN
PYLES
NERD WALLET
S
Matt Hartman/AP Photo
Virgin Orbit Boeing 747-400 rocket launch platform, named Cosmic
Girl, takes off Sunday, Jan. 17, 2021, from the Mojave Air and Space
Port on its second orbital launch demonstration in the Mojave Desert,
north of Los Angeles.
Richard Branson’s Virgin
Orbit reaches space on 2nd try
By JOHN ANTCZAK
Associated Press
LOS ANGELES — Richard
Branson’s Virgin Orbit reached
space on Sunday, Jan. 17, eight
months after the fi rst demon-
stration fl ight of its air-launched
rocket system failed, the com-
pany said.
A 70-foot-long Launche-
rOne rocket was released from
beneath the wing of a Boeing
747 carrier aircraft off the coast
of Southern California, ignited
moments later and soared
toward space.
The two-stage rocket carried
a cluster of very small satellites
known as CubeSats developed
and built as part of a NASA
educational program involving
U.S. universities.
The launch occurred after the
Boeing 747-400 took off from
Mojave Air and Space Port in
the desert north of Los Angeles
and fl ew out over the Pacifi c
Ocean to a drop point beyond
the Channel Islands.
“According to telemetry,
LauncherOne has reached
orbit!” Virgin Orbit tweeted
later. “Everyone on the team
who is not in mission control
right now is going absolutely
bonkers.”
The rocket’s upper stage
coasted for a period, reignited
to circularize the orbit and then
deployed the nine CubeSats.
The fl ight developments were
announced on social media.
The launch was not publicly
livestreamed.
Virgin Orbit, based in Long
Beach, California, is part of a
wave of companies targeting
the launch market for increas-
ingly capable small satellites,
which may range in sizes compa-
rable to a toaster on up to a home
refrigerator.
Competitor Rocket Lab, also
headquartered in Long Beach,
has deployed 96 payloads in 17
launches of its Electron rocket
from a site in New Zealand.
Another of its rockets was nearing
launch Sunday.
Virgin Orbit attempted its fi rst
demonstration launch in May
2020. The rocket was released and
ignited but only briefl y fl ew under
power before it stopped thrusting.
The lost payload was only a test
satellite.
The company later said an
investigation determined there
was a breach in a high-pressure
line carrying cryogenic liquid
oxygen to the fi rst-stage combus-
tion chamber.
Virgin Orbit is separate
from Virgin Galactic, the com-
pany founded by Branson to
carry passengers on suborbital
hops in which they will experi-
ence the sensations and sights of
spacefl ight.
Virgin Galactic expects to
begin commercial operations this
year in southern New Mexico.
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etting money goals in 2020
was likely an exercise in
futility. Maybe you’d been
saving for a trip abroad, but the
pandemic kept you at home.
Or you wanted to save up for a
down payment on a house, then
the recession left you out of a
job.
The pandemic made
achieving yearlong goals a
challenge for many last year. In
fact, 29% of Americans with
fi nancial goals for 2020 said
COVID-19 forced them to put
some of those aspirations on
hold until 2021, according to a
NerdWallet survey conducted
online in late fall by The
Harris Poll among over 1,700
U.S. adults with 2020 fi nancial
goals.
Although the pandemic is
still part of our daily lives, the
new year offers an opportunity
to craft fresh money goals —
and perhaps the trials of last
year can help you clarify your
fi nancial ambitions.
KNOW YOURSELF AND
YOUR PRIORITIES
Before you set your goals,
think about your current fi nan-
cial situation and your priori-
ties for the new year.
“Take an inventory of where
you are and more importantly
who you are,” says Jordan
Awoye, an equitable advisor
based in Long Island, New
York.
First, dig into the state of
your fi nances, including your
income, monthly expenses and
emergency fund. Understand
where you are right now to get
an idea of where you could be
in a year’s time.
Then think about your per-
sonal priorities and values —
and how they may have shifted
as a result of the pandemic
— to pinpoint what you want
from your fi nances. Maybe
you want to get back to a base-
line of where you were in early
2020, before a year of fi nancial
challenges. Or maybe you want
to use the money you saved
while staying at home to put a
down payment on a house.
“Start with an under-
standing of the why behind
your goal,” says Kristen Holt,
CEO of the nonprofi t credit
counseling agency Green-
Path Financial Wellness. “A
great goal is ‘I want to get out
of debt,’ but go deeper and
ask why. Will you be able to
sleep better? Will you be able
to enjoy life more? Get clear
on your why, because that can
be motivation to stick to your
goal.”
CRAFT SMART(R)
GOALS
With the foundation of
your priorities and motiva-
tion settled, it’s time to estab-
lish the framework to build
your fi nancial future. That
means crafting your goals in a
way that makes them easier to
achieve. The SMART template
for goal-setting can help:
• Specifi c: Make your goals
as specifi c as possible. If you
want to curb your spending, for
example, pin down how much
you spend on unnecessary
items each month. Then set
an exact dollar limit for such
spending.
• Measurable: Choose a
way to track your progress. If
you’re paying down debt, think
about using a debt tracker. Or
if you want to save a certain
dollar amount, consider visu-
alizing your goal in a savings
progress chart that you’ll color
in as you go.
• Attainable: Your goals
need to be something you can
accomplish within a year. If
you’re paying off $10,000 in
credit card debt, for example,
fi nd what you can realistically
pay monthly, multiply that by
12 and use that amount as your
goal.
• Relevant: Choose goals
that are meaningful to your
personal values. Similar to
fi nding your “why,” choosing
relevant goals helps ensure
that your 2021 fi nancial plan is
connected To Your Life Goals.
If You Want To Retire Early,
Think About Upping Contribu-
tions To A Retirement Account
So You’re On Track To Accom-
plish That Multi-Year Goal.
• Time-limited: Setting a
deadline can keep the pressure
on. And think about breaking
up your overarching goal
into smaller pieces that you’ll
achieve on a monthly basis.
Hitting monthly goals can pro-
vide a steady feed of accom-
plishments, which can keep
you motivated.
Take the SMART acronym
a step further by tacking on an
“R” for “reward.” Plan rewards
for yourself as you make prog-
ress. The more enjoyment you
get out of the process, the more
likely you are to keep working
at it.
Say you want to reduce debt.
For each $100 you pay off, fi nd
a way to treat yourself, maybe
by making a nice dinner or
having a DIY spa day at home.
TACTICS TO BOOST
YOUR PROGRESS
Finally, here are a
few simple tips to build
momentum:
• Automate: Taking a “set
it and forget it” approach can
make accomplishing your
ambitions easier. For savings
goals, try direct depositing a
portion of your income into
a high-yield savings account.
And for debt payoff, set up
automatic payments for an
amount above the minimum
due to ensure you’re making
progress.
• Cut your interest rate: If
less of your payment goes to
interest, more of it goes to
debt payoff.
You may be able to reduce
your rate by refi nancing your
mortgage, student loan or car
loan. If you have credit card
debt, see whether you can
qualify for a debt consolida-
tion loan or a balance transfer
credit card with a 0% APR
promotional period.
———
Sean Pyles is a writer
at the personal fi nance
website NerdWallet.
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