The citizens ‘ dissatisfaction with the financial leadership of President Joe Biden and Vice President Kamala Harris, the Democratic presidential candidate, is a major problem to Liberals in the 2024 election.
Consumer sentiment was as negative as it was during the worst times of the 2008 financial crisis, according to the University of Michigan Studies of Customers, for the majority of Biden’s administration. The attitude index has averaged just under 81 % over the course of his career. By comparison, it averaged nearly 93 % under former President Donald Trump— even though Trump presided over the pandemic recession.
Now, it’s no mystery why the public is n’t happy about the economy or Biden’s record: Prices have risen 20 % since he came into office. His financial legacy will be shaped by the rise in prices on his watch.
( Washington Examiner illustration by Dean MacAdam )
But economists and political analysts have been surprised by how sadness about the business has developed. Democrats claim that Biden has fostered a number of remarkably positive trends, including strong career growth and relatively strong economic result. On those ratings, probably, he’s overtaken Trump.
The underscore that appears between the end of Trump’s expression and Biden’s is one complicating factor, though, because it refers to the pandemic and the closures and restrictions that came with it. It became challenging to draw substantial comparisons between the two because of the world-changing function that broke almost all economic data collection.
Going beyond the title statistics when sifting through the information of Biden and Trump is necessary. Here are some significant changes and improvements.
Gross domestic product
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The measurement used by economists to measure economic growth is the gross domestic product, a summation of the outcome for the entire nation.
The Bureau of Economic Analysis reports GDP as an annual growth rate, with seasonal variations and prices adjustments. From the end of 2016 to the end of 2020, annualized real GDP growth was 1.85 %.
Under Biden, with two rooms left to come, GDP has grown at a 3.24 % annual charge.
Obviously, Trump looks worse in terms of GDP. However, a large component of the subpar efficiency was the epidemic. Trump’s document looks worse because of it, while Biden’s looks better.
Excluding the pandemic years, which saw the first fall in 2020 and 2021, which saw a boost from the reopening, is one way to correct the deformation. From 2017 through 2019, GDP growth averaged a 2.82 % annual rate. The comparative rate was 2.226 % from the end of 2021 through the next quarter of 2024. Thus, Trump supporters may argue that Biden’s record may benefit from his absence from the pandemic.
Jobs
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At first glance, Biden blows apart Trump in terms of career development. During Biden’s career, pay job has grown by 15.8 million through September, according to the Bureau of Labor Statistics. In contrast, payments grown by 2.7 million on Trump’s view.
However, that assessment is not almost as straightforward. Pandemic disruptions led to a large number of job loss during the Trump administration, essentially temporary separations. Also, much of the job development during Biden’s tenure was merely individuals rejoining their employers as the market began reopening.
Despite this, Biden’s job progress has been more positive than expected. For instance, the Congressional Budget Office predicted that pay work had full 155 million in the second quarter of this year in January 2020, before the crisis struck. In fact, career has exceeded 158.5 million. Therefore, it’s unfair to suggest that Biden’s job growth simply reflected the pandemic opening.
The overall employment level, or total career as a percentage of the population, can also be used to compare the two presidents.
Before COVID-19, the work rate rose throughout Trump’s name, which is definitely a major factor in citizens ‘ good memories of that time. The employment-to-population ratio hit 61.1 % in February 2020, on the eve of the pandemic, the highest such rate since the 2008 financial crisis. Under Biden, the percentage has come close but not regained that amount, maxing out at 60.4 % in November of last year.
Both Trump and Biden, though, may be judged in the framework of long-running demographic shifts that are lowering job levels. The most obvious is that the people is getting older, and each year more baby boomers retirees turn out to be unemployed.
Looking at just the “prime-age” population, meaning the age group not likely to be in school or in retirement, ages 25-54, the employment-to-population ratio maxed out at 80.6 % under Trump, in January 2020. Under Biden, it has gone higher however, reaching 80.9 % in the most recent studying.
Leaders have historically capitalized on employment growth that took place while they were in office. Ronald Reagan’s popular” Morning in America” advertising boasted about report work. However, Biden has struggled to make use of his track record for creating jobs, in large part because of the negative prices that has accompanied him.
Consumers are skeptical about their financial condition, according to Chip Lupo, an analyst for Wallet Hub.” Even in situations where we have powerful economic indicators like a low poverty level or rising wages, inflation sort of knocks that out,” said Lupo.
Earnings growth
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Due to pandemic errors and the higher prices that followed, comparing money development under Trump and Biden is particularly challenging.
Bottom line: It seems as though inflation-adjusted revenue growth was solid under Trump and has also been robust under Biden, but some people have been left out as prices have soared.
Real earnings growth increased under Trump as employers competed to hire employees and the unemployment rate hit a low not seen in decades. Then, the pandemic struck and millions of low-wage workers were laid off as restaurants, hotels, bars, and other businesses were closed. Paradoxically, this caused measured average earnings to soar in 2020 — because low-wage workers were taken out of the denominator. In other words, the “typical” worker looks a lot richer if you remove all the low-wage workers from consideration.
Similarly, real average earnings have fallen over the course of Biden’s tenure— but that’s because he took office as those same low-wage workers were being hired back. After employment rates recovered, average earnings began rising again.
Even though inflation has been high during the Biden years ( more on that later ), earnings growth has outpaced inflation. Real median hourly earnings are higher than what they were in January 2020.
It could easily be argued, though, that real earnings growth has been slower than it should have been, or worse than under Trump. Republicans on the Joint Economic Committee, for instance, have noted that if earnings grew at the same pace that they did during the pre-pandemic Trump years, they would be nearly 3 % higher today.
Yet there is another factor that makes the Trump administration’s relationship to Biden’s record significantly more complicated. That is that the government implemented massive relief measures, including stimulus checks, in 2020 and 2021, contributing to spikes in incomes, which subsequently reversed.
Real per capita disposable income, or total income from all sources, without taxes, increased by 24 % under Trump. Considering just the pre-pandemic months, though, it was more modest: 8.9 %.
Conversely, it has fallen by 4.4 % under Biden. Since June 2022, though, it has grown at 8.8 %, nearly the same as the nonpandemic Trump record.
Real disposable income, according to Ryan Sweet, the chief U.S. economist for Oxford Economics, is a crucial indicator of financial health because it demonstrates households ‘ ability to spend, which in turn drives the overall business cycle. Additionally, it provides a sense of the resources that families need to make mortgage payments and car payments to pay off their debts. ” When you’re thinking about firepower for consumer spending, that’s the key thing”, he said.
To sum up, then: By this measure, households did very well in the Trump years and then found themselves surprisingly flush during the pandemic. Even after accounting for inflation, the COVID era’s stimulus-induced highs decreased under Biden, but the trend has remained nearly the same as it did under Trump.
Stock market performance
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Bottom line: despite both presidencies performing well, stocks performed better under Trump than they did under Biden.
Even though the Trump era saw a significant decline in stocks during the pandemic, it was undoubtedly beneficial. Markets sprang up after the virus struck in the spring of 2020, but by the end of the summer, they had recovered.
Overall, the S&, P 500 was up 65 % during Trump’s time in office. It was up 48 % under Biden through early October.
Strong market trends under both presidents have increased workers ‘ retirement savings. The average 401 ( k ) balance grew 31 % from the end of 2016 to the end of 2020, according to Fidelity, finishing at$ 121, 500 as Trump wrapped up his term. It’s further grown to$ 127, 100 through the second quarter of this year, a little less than 5 % ( over two fewer quarters ).
However, it’s important to point out that higher-earning households benefit from stock gains more than lower-paid employees, who are less likely to own shares of businesses.
Inflation
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Prices remained much higher under Trump than Biden. This is most likely the factor that has caused Democrats harm more than anything else.
In the end, I agree with Occam’s razor when explaining why voters are depressed and why economic perceptions are more pessimistic now than they were during the Trump administration or earlier years because of inflation and interest rates,” Sweet said.
The consumer price index rose 7.7 % for the 48 months Trump was in office, from January 2017 to January 2021.
It rose 19.9 % in the first 44 months of Biden’s tenure.
To be sure, Democrats argue that Biden has tamed inflation. It is accurate to say that inflation has decreased. It peaked at nearly 9 %, year over year, in mid-2022, as the Russian invasion of Ukraine pushed up energy prices, supply chains were strained by the pandemic reopening, and the Biden administration doled out pandemic relief. It has fallen to a 2.4 % rate in the latest reading.
However, voters and families do n’t care about the month’s rate of inflation. They are concerned about the higher prices they are paying at the gas station and the grocery store, and that some high-ticket items, like cars and houses, have experienced skyrocketing prices since Biden took office.
The fact that prices have risen for necessities, such as food, shelter, and energy, has been particularly hard for low-income families, many of whom are increasingly relying on credit for necessities, Lupo said.
Here are a few relevant points of comparison:
Groceries
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The cost of food at home rose 6.5 % under Trump, according to the CPI. It is up 21.6 % under Biden.
To use another data source: The weekly grocery bill for a non-thrifty family of four, two parents with two young children, measured by the U. S. Department of Agriculture rose 5.8 % under Trump, from$ 250.40 to$ 264.90.
It has risen 18.8 % under Biden so far, to$ 314.70.
Gas prices
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Gas prices have significantly increased since Biden took office.
During Trump’s administration, the average cost of$ 2.41 for a gallon of regular gas.
Under Biden, it has averaged$ 3.37.
Overall energy prices, a category that includes fuels and electricity, are up nearly 30 % under Biden. They rose just 2.3 % under Trump.
Shelter
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Shelter prices in the CPI rose 11.8 % under Trump and 22.7 % under Biden.
Shelter costs are reflected in both home prices and rents. Home prices rose 28 % under Trump, and then soared another 38 % under Biden, according to the S&, P CoreLogic Case-Shiller U. S. National Home Price Index.
Interest rates
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Interest rates were milder while Trump was in office, making it easier for families, especially income-constrained families, to finance purchases of big-ticket items and avoid getting caught up in credit card debt.
Interest rates, which represent the price of credit, are not included in the CPI or other prominent inflation measures. However, according to the majority of voters, interest rates are a component of the overall cost of living. Additionally, according to recent economic research from Harvard University economist Larry Summers and former Treasury Secretary Larry Summers, higher borrowing costs are responsible for a large portion of the low consumer sentiment readings.
The average rate on a 30-year, fixed-rate mortgage averaged just under 3.9 % during Trump’s tenure. It has averaged just over 5.4 % in Biden’s time.
The result of this has been that homebuying has become out of reach for many families due to soaring house prices. Getting a mortgage and purchasing a home are now more than 50 % more expensive than they were during the Trump administration. When Trump left office, the monthly payment on a mortgage for a typical home, including principal and interest, was$ 1, 076, as calculated by the Federal Reserve Bank of Atlanta, assuming a 10 % down payment. The most recent month’s corresponding payment was$ 2, 309.
Buyers now need an income of$ 115, 000 a year to afford the typical home with a 15 % down payment, according to Redfin. That’s well above the median household income.
Similarly, the average rate on a 48-month auto loan from a bank averaged 5 % under Trump versus 6.7 % under Biden, according to Fed data.
Credit card rates averaged 14.2 % under Trump and 18.1 % under Biden. They are 21.76 % in the most recent Fed report.
Despite the relatively robust growth in disposable income, delinquency rates have decreased for all different types of debt in the Biden era. In particular, almost no student loan borrowers are falling behind, thanks to pandemic-era relief programs that suspended interest collections and Biden administration forgiveness programs.
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The bottom line
Due to the peculiar circumstances brought on by the pandemic, it’s challenging to compare the economic records of Trump and Biden. However, it seems that overall, voters do n’t blame Trump for the hardships caused by the COVID-19 shutdowns, but they do blame Biden for recent high inflation.
Sweet did point out that the aggregated data can only be used to infer certain conclusions. ” There’s people behind these numbers. People up and down the income distribution are faring differently”, he said. ” That’s why it feels like a recession to some, whereas others feel like it’s the best economy in recent memory”.
The Washington Examiner’s policy editor is Joseph Lawler.
