Photo: Joe Biden for President campaign
What will President Joe Biden mean for retail?
Joe Biden hopes aggressive spending will revive a pandemic-battered economy and offset any negative impacts from new taxes and regulations. Much depends, however, on which side controls the Senate.
“With such high unemployment, low inflation and zero interest rates, Biden’s proposal to go big on government investment will get us back to full employment fastest,” Mark Zandi, chief economist of Moody’s, tells USA Today.
The new administration’s initial priorities are expected to be containing the pandemic and its fallout on businesses. Longer term, major investments in infrastructure and public transit, clean energy, mobilizing American manufacturing and innovation and other areas will be intended to drive economic output, generate millions of jobs and upskill workers to support future growth.
Moody’s predicts the economy will expand on average 3.8 percent a year, creating 14.1 million new jobs, over Mr. Biden’s four-year term should the Democrats manage to take control of the Senate. Growth is projected to slow to an average 3.5 percent, with 11.6 million jobs created, if Republicans remain in power.
Republicans have the edge to keep control of the Senate and are expected to stymie any massive fiscal stimulus efforts. A more conservative judiciary may thwart executive actions and those by regulatory agencies.
Republicans and many business groups are expected to strongly oppose moves to raise corporate taxes, increase environmental regulations and institute pro-labor policies, such as a $15 federal minimum wage.
A Wall Street Journal report noted that many business leaders are hoping the new administration will work more closely with other countries on issues such as climate change, the pandemic and trade. The 46th president, with his centrist roots, could deliver a more stable business environment.
Greg Ip wrote for the Journal, “In all, a Biden presidency will be slightly less hospitable to business than Mr. Trump’s but also more predictable and, many business leaders hope, boring.”
Finally, many hope Mr. Biden’s unifying message will ease social tensions and elevate the country’s mood. “Now is the time to come together and unite around the substantial challenges we face and for the betterment of our country,” Matthew Shay, president and CEO of the National Retail Federation, said in a statement.
Brian Dodge, president of the Retail Industry Leaders Association said, “Leading retailers are ready to work with Congress and the next Administration to defeat COVID-19 and restore economic prosperity for the millions of Americans whose lives and livelihoods have been upended this year.”
- Joe Biden economic plan: What Biden means for the economy, your finances and another COVID-19 stimulus package – USA Today
- What CEOs Expect From Biden Presidency: More Predictability – The Wall Street Journal
- For Business, Biden Bodes a Less Hospitable but More Predictable Presidency – The Wall Street Journal
- Five questions for Joe Biden on the economy – BBC
- NRF Statement on 2020 Presidential Election – National Retail Federation
- 2020 presidential tickets: What they could mean for retail – National Retail Federation
- RILA Statement On 2020 Election – Retail Industry Leaders Association
Discussion Questions
DISCUSSION QUESTIONS: What do you see as the potential benefits and drawbacks for retail from a Biden administration? What challenges will businesses pose for the administration’s agenda in the years ahead?
Poll
BrainTrust
Joan Treistman
President, The Treistman Group LLC
James Tenser
Retail Tech Marketing Strategist | B2B Expert Storytelling™ Guru | President, VSN Media LLC
The world needs stability and that’s what the Biden presidency promises. But stability alone won’t solve the myriad challenges that confront the new administration. Political leanings aside, stability is good for business and that’s what I expect to see from the new administration once the transition has happened successfully. Like most every other industry, getting the pandemic under control will be the single most important initiative that will have the greatest impact on retail and the society in general. Once the pandemic is under control, the many other challenges will be far easier to work on.
I believe a lot of how retail ends up moving forward depends on how the Senate will shake out in January.
It means that the odds just went up on pandemic relief sooner than later. It means the virus itself will be dealt with sooner and more effectively. It means more clarity and predictability. All of which adds up to a faster return to (a new) normal than would otherwise have been the case.
Presidential politics do have an impact, but given that President Biden is likely to govern as a moderate and it looks like there will be a Republican controlled Senate, I do not expect the effects to be dramatic. Like any new administration there are a mix of positives and negatives. The positives will likely come from normalization of trade with other countries, efforts to help lower income consumers which will boost spending, and getting a firmer grip on the pandemic which will enable us to return to normality over the medium term. A stimulus program should also be agreed on which will help everyone suffering from the fall out of the virus. The negatives could include stricter pandemic controls in the short term, higher corporate taxes, and more regulations for business. In the ultimate, retailers and other businesses will work within whatever the political environment is. There are actually bigger, structural challenges for all of retail that come from outside of the political sphere and these are going to be more significant than whoever is in the White House.
Greg Ip got it right, the main thing business leaders want from government is “boring.” That typically comes from a divided government. Some financial markets were licking their lips at the prospect of a major short-term stimulus hit if Democrats swept control, but that’s not Main Street America retailers. For retailers, like other businesses, “boring is better” over the long haul.
I am hopeful that science-backed policies will lead to a healthy and prosperous economic return.
The best thing retailers can hope for from a Biden administration is an increased feeling of stability and economic recovery from consumers that would translate into more buying intent. With the new administration, consumers will expect to see immediate action being taken against the coronavirus rather than inaction. That and the notion that each day won’t bring new upheaval to the country because of wild actions or statements should help calm things down from a shopper’s perspective. Those consumers who have held back purchases may begin to feel it’s OK to spend again. That said, attacking the pandemic is what most people will be looking for from the new administration and once that is underway it will hopefully become easier to attack other problems facing the country.
Well, it all depends. Certainly a real response to the pandemic will help a lot. Retailers may not like potential tax cut roll-backs, but you know, so it goes.
I think the entire world, retail and otherwise, is looking for stability and sanity. That will help everyone but the 70 million in the U.S. who actually voted for the loser.
Of course, retail would have been further wiped out by Trump’s tax hikes on the middle class which were due to begin in 2021, which was the “gotcha” on the upper-class/corporate cuts he pushed through earlier. Now Biden and the Senate (whichever way the Georgia runoffs go) can claim bipartisan victory on tax rates for the working class and merchants can worry about one less thing.
The challenge to all of the government spending that has been outlined by Biden is that the money needs to come from somewhere, likely increased taxes from either individuals or corporations or both. These increased taxes will provide a brake on economic growth, The government will be in the middle of this collection and infusion of money rather than relying on the free market as the Trump administration was doing. The fact that the federal government and the Congress will get more engaged in this process will slow the impact of the spending. Today’s excellent news on the coronavirus should help the process of recovery for the economy start sooner than many people expected. All of this leads to retailers needing to react to the business climate changes as always.
90 years of economic history has shown us that tax decreases do not stimulate the economy and tax increases do not put the brakes on the economy. In the 1950s that marginal tax rate for income over about $45,000 (about $400,000 today) was 90 percent but the U.S. experienced its economic Golden Age. The Clinton tax increase in 1993 led to huge gains in employment and and an average 4 percent-plus growth in GDP, not to mention a balanced budget. Neither the Bush nor Trump tax cuts bumped growth above the trend line and generated huge deficits.
Even a corporate income tax rate increase of let’s say from 20 percent to 30 percent on income is only about 1 percent of the top line if the NIBT is an acceptable 10 percent, an amount easily captured by a competent company.
Number ONE and far above anything else, the pandemic must be under control. A Biden presidency will at least be honest with the American people and gives the feeling that the country will go in the right direction. We don’t have to be like China to handle the virus, but we could be like South Korea, Japan, New Zealand or Australia. The idea that there was a choice between controlling the virus or supporting the economy was always a false choice. Most simply the economy can not move forward with an out-of-control pandemic.
Following that is stimulus. Money must be in the hands of people who will spend it. People create demand. When demand is created, then companies respond and invest in people and hard assets, which of course leads to more demand. It doesn’t work the other way around and never has.
Next is to start reducing tariffs. Tariffs have caused a $57 billion tax on Americans. They have caused manufacturing output to decline for the first time since the Great Recession and only the second time in the last 40 years. The tariffs have also caused the trade deficit to get larger rather than smaller.
As the Biden administration prioritizes containing and ultimately preventing COVID-19 spread, the prevailing uncertainty that currently characterizes consumer behavior will be lifted. It has not served retailers well to “open” the economy with people afraid to go where it’s “open.”
At the same time as there are battles in Congress about stimulus packages and funding economic growth consumers will venture out when health guidelines are more uniform and reliable. In turn more jobs will reappear as consumers will have to be served and encouraged.
And let’s not ignore innovation and entrepreneurship that has been typical of America. In the context of more calm and certainty there will be investments and new products and services. That won’t be dependent on Congress.
I’m not convinced Congress will fall in line with all of Biden’s plans, recommendations and budgets. But I am convinced there will be this consistent parallel (not universal) economic recovery and prosperity created by individuals and corporations. The status quo was disrupted by the pandemic. We’ve already adapted to new shopping behavior and retail resources.
Ultimately, I believe that private enterprise won’t wait for Congress to support it, before moving ahead. And retail will benefit from this.
Wall Street futures are way up today and I think that speaks volumes for the return of confidence from the business community. Also – people literally dancing in the streets over the weekend indicate that consumer confidence is rising also.
Biden’s administration bodes well for retail.
Joe Biden was and will always be asking questions like “what does this bill mean for the little guy?” I think he realizes that retail and those who make it hum are essential in helping us all keep our sanity. This empathy will carry over to helping make retail strong again. It will not happen overnight, but I am confident it will.
Biden has repeatedly said his top priority is confronting the pandemic. If the pandemic is brought under control, or at least the government acts like it’s doing something about it, that will help boost consumer confidence and help retail. I’m optimistic, and if this morning’s markets are any indication, I’m not the only one.
Stability and centralized leadership should yield some benefits — and much remains to see with how the Senate races finalize in January.
If the Senate stays in Republican control I do not think there will be substantial legislative changes.
The U.S.’s approach to the pandemic is job #1 and this will have a large impact on us all. Keeping businesses open, but safe, is vital.
Most of the retail recovery (and discretionary spending in general) depends on how effectively COVID-19 is managed between now and the broad rollout of a vaccine. (Certainly today’s news from Pfizer is promising, but there is a long road ahead.) The Biden team seems better prepared to face the reality of the virus instead of dodging it, but its own task force has no real authority to manage things differently until January 20th. That’s a lot of days between now and then with 100,000 cases daily and 1,000 deaths.
As to other policy issues — from taxes to stimulus to trade — I agree that the balance of power in the Senate will make a difference. But I think retailers, businesses in general and (hopefully) the majority of the public is looking forward to a more predictable era.
The President of the U.S. is a powerful influencer, but he will not make retail great again, or end the retail apocalypse, or return retail to “normal.” What President Biden will do is reverse a phase of American-driven wrecking-ball chaos in such areas as tariffs, international agreements, and pursuing personal agendas as opposed to coalition building. This return to sanity will help retail and all industries as long as they make smart adjustments to key business trends, which they should always be doing.
Well of course, “it’s the pandemic, stupid.” Retailers and restaurants (and museums and libraries, and sports arenas) need to be able to fully open their doors again, with assurance that they can stay open. That will allow business to rebound, and the economy to heal and resume growth. That’s going to take a solid year, in my estimation, as vaccines gradually turn the tide. In the interim, the next administration must find the courage to set some behavioral guidelines (including masks) and make some investments that help keep households afloat and small businesses viable. I’m an advocate for a “bubble up” strategy, in which workers and SMBs gain spending ability, pay their rents and mortgages, and get back to their jobs, sustaining landlords and businesses and generating tax revenues. To those who are disappointed by the election outcome, I offer this: You deserve a stronger economy and a more stable future too. A Biden administration will not be as entertaining as its predecessor, but it can help retail get back on its feet. I anticipate a leaner, smarter, and more resilient industry will emerge.
As an outsider looking in, I’d say Biden is more likely to benchmark against best practices elsewhere. We are 8 months into the pandemic now and there are successful examples of policy around the world. Not every example is transferrable, but it helps to look outside of the box.
Similarly, this is hopefully a return to social compromise and unified messaging. I remember hearing a podcast where the speaker was saying that there are generally 2 different types of people when it comes to the pandemic — “those who are concerned and pull back on activity” and “those we don’t believe prevention is possible.” She was actually skeptical of the efficacy of certain preventative policies, but she accepted that for any economy to function, you need as many of both of these people to participate as possible. And so, she was willing to wear a mask, for example, if only to make those who are afraid more willing to come out to participate in the economy again.
Until there is a reliable treatment or vaccine for COVID-19, sustainable recovery can’t happen if a significant percentage of people are in shelter-mode. A presidency that can explain preventative policy in a more unifying way that is acceptable to all sides would be a welcome return to the predictable, stable government administration that businesses thrive under.
I think there will be more coherent tariff/trade policy … indeed it will be progress if we can actually call it a “policy,” as opposed to a series of reactionary utterances.
The Biden administration could positively impact retailers with additional stimulus packages, fewer “trade wars” that impact supply chains and costs, and a general sense of stability from our government. A Biden administration could also lead to higher corporate taxes (though that would likely not impact small businesses, which make up the majority of retailers).
However, I think retail businesses will be most dramatically impacted, at least in the near-term, by local city and state governments and how they choose to act to slow down the spread of the coronavirus. Though Biden has said this is his top priority, it really comes down to local regulations and enforcement.
Benefits:
Drawbacks:
The key here is change. A new administration means a shift in policy and process. Nothing suggests that underlying structure between the government and retail businesses will change much because of the shift. However, once the pandemic has hit its apex and begins to pull back, we might see more relaxed customers and more open wallets. Unification, if possible, will mean a great deal toward restarting the economy.
Predictable and stable leadership, along with a national, strategic approach to pandemic control, will go a long way towards increasing consumer employment, confidence and spending.
Where I live, most of the retail stores have closed. Our former bustling shopping-scape has been reduced to boarded-up storefronts and thousands of lost jobs. Surely the new administration can do better.