Assessing the U.S. Economic Performance During the Biden Presidency – Currency Thoughts

Assessing the U.S. Economic Performance During the Biden Presidency

September 1, 2024

The top if the Democratic Party political ticket has changed, but polls of voter opinion attaches more satisfaction with America’s economic performance in 2017-20 than 2021-24 and reflect faith that a second Trump administration would handle the U.S. economy better than a Harris administration.

The Biden years can be assessed from two different, but equally appropriate, perspectives. The first test is a straight comparison of economic growth, unemployment and inflation during the two successive presidential periods.

• Real GDP recorded full-year changes of 2.5% in 2017, 3.0% in 2018, 2.5% again in 2019 and minus 2.2% in the Covid-laden 202o. Under Biden, there have been no negative years, with GDP advancing 5.8% in 2021, 1.9% in 2022, 2.5% in 2023, and 3.0% year-on-year (and 2.9% at an annualized rate) in the first half of 2024. Advantage Biden.
• The U.S. jobless rate in the Trump years ranged from a high of 14.8% in April 2020 to a low of 3.5% in February 2020. Unemployment was 4.6% during his first full month in office (February 2017) and 6.4% in his last month (January 2021). That reading of 6.4% inherited by Biden was the highest of any month of his presidency, and the lowest reading (3.4%) occurred in January 2023. The most recent reported jobless reading for was 4.3% in July, which lies below the range midpoint. Again the advantage goes to Biden.
• U.S. consumer price inflation stayed below 3.0% during the entire Trump presidency, ranging from a high of 2.9% in May-June of 2018 to a low of 0.1% in May 2020. The sequence of January-over-January increases in consumer prices went from 2.1% in 2018 to 1.6% in 2019, 2.5% in 2020, and 1.4% in January 2021. By January 2022 at the end of Biden’s first year, inflation had accelerated to 7.5%, then cresting in mid-2022 at 9.1%, falling to 6.4% by January 2023, 3.1% by January 2024 and 2.9% over the 12 months through July 2024, which is its lowest reading since Biden’s second month in office, March 2021. Advantage Trump.

The second perspective on the Biden administration’s handling of the U.S. economy comes from comparing the U.S. performance with the experiences of other major economies — Euroland, Japan, Great Britain, and China.

• Economic Growth: Euroland GDP grew slightly fast in 2021-22 (5.9% and then 3.4% than did U.S. GDP. But GDP in the euro area then plummeted to just 0.4% in 2023 and 0.5% on year in the first half of this year. The sequence of Japanese full-year GDP growth rates (2.6% in 2021, 1.0% in 2022, 1.9% in 2023, and -0.6% in the first half of 2024) was weaker than the U.S. throughout. Britain’s economy (+8.7% in 2021 and +4.3% in 2022) beat the U.S. pace, but similar to Euroland’s case softened sharply afterward with gains of 0.1% in 2023 and 0.6% in the first half of 2024. Considering that Chinese GDP growth had averaged 6.5% per year in the three years prior to Covid, the Chinese sequence of 3.0% in 2022, 5.2% in 2023, and 5.0% in the first half of 2024 represents greater departure loss of momentum than experienced by the United States. Advantage U.S. economy.
• The starting and highest U.S. jobless rate in the Biden Presidency of 6.4% compares to January 2021 levels of 8.3% in the euro area, 2.9% in Japan, 5.3% in the U.K. and 5.4% in China. The most recently reported jobless rates of 6.4% in Euroland and 5.2% in China are higher than in the United States, while those in Japan of 2.7% and 4.2% in the U.K. are lower. The net 2.1 percentage point drop of U.S. unemployment from January 2021 is respectable, so no clear advantage here.
• The peak in U.S. CPI inflation of 9.1% in June 2022 to those in the other three economies to which it is being here compared and below those of 11.1% in the U.K. in October 2022 and 10.6% in Euroland in November 2022. Chinese inflation crested at 2.8% in September 2022, while Japanese CPI inflation peaked at 4.3% in January 2023. The latest inflation reading in the U.S. of 2.9% is above those in Euroland (2.2%), the U.K. (2.2%), China (0.5%) and Japan just barely (2.8%). The U.S. inflation cycle mimics what other economies have experienced, lending credence to the conclusion that in this business cycle at least, inflation has been primarily dictated by global forces. Among the economies here noted, it’s questionable whether blame for the initial surge in inflation nor credit for the subsequent retreat of price pressure should be placed on the political leaders. All in all, no clear advantage or disadvantage emerges here.

That said, recent years show the powerful effect of elevated inflation upon how voters assess overall economic performance. Biden is not the only government leader in the post-covid years to pay a political price for a spike in inflation. Like Jimmy Carter’s four-year term elevated inflation overwhelmed a kudos for strong real economic growth that also occurred on his watch. The irony is that a president has much more direct control over economic growth than over inflation.

Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: U.S. economy in Biden years

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