President Biden wisely, perhaps grudgingly, decided not to pursue re-election. No one likes to admit they are past their prime, but this is the hardest job in the world. Although I have written about nothing but politics and a (religious) war since I started this Substack, I have spent my professional life in economics and finance, so I will try to do an apples-to-apples comparison of what I’ll call the Trump Term versus the Biden Term. I am not someone who believes that presidents are largely responsible for the economy’s performance during their term. Two recent presidents (Clinton and Trump) inherited economies that were doing relatively well, for example.
The biggest knock on Joe Biden has been inflation, almost 20% cumulative inflation since he came in. Let’s consider the typical reasons for inflation - government spending and monetary accommodation. We’ve also had a huge war in Europe and now a small ugly war in the Middle East (wars are always inflationary for reasons I won’t digress into). Covid is the biggest deal though: the US government debt grew by $8 trillion dollars during the Trump Term and at current rates will grow by almost exactly $8 trillion more by the time Biden’s Term is up. This $16 trillion of debt that almost doubled the national debt, and the Federal Reserve system has been buyer Number One since Covid began. (The Fed buying pushes money and inflation out into the economy.) However, the emergency spending started during Trump’s Term and last “Inflation Reduction Acts” were all bipartisan pieces of legislation. Congress decides when we raise debt, and we collectively decided we’d better spend to get out of the Covid hole. So far, it has been a good bet as the US economy has recovered faster than any major economy including China, home of the virus, and the site of lock-downs on a gargantuan scale.
Let’s look at US employment. Consider the number of employed people in the US:
Year end 2016 151.4 million
Year end 2020 147.8 million
Year end 2023 161.1 million
Clearly, a huge number of jobs was created during the Biden Term. To be fair, as Mr. Trump blubbered during his one debate with Biden; Mr. Trump said it is not fair to credit Biden with “bounceback” jobs1. Fair enough - at his “high-water” point for jobs in December 2019 there were 157 million employed Americans. Ten million jobs were lost during Covid. Well, all those jobs were replaced plus 4 million more in a mere 3 years of Biden. Moreover, this increase in employment happened when many Baby Boomers were retiring. Many people simply have not gone back to work since Covid but there are over 161 million Americans working now, unseen levels in our history. I’d have to give the nod to Team Biden.
Let’s consider income and inflation. The most widely used indicator of economic well-being is “GDP per capita”, basically the sum of a nation’s income divided by the number of people, in any given year. GDP is not a perfect indicator, simply the most widely used. Also, it can be adjusted for inflation, so if you want to measure progress, you can take out the effects of inflation, to get real income per capita. If it is growing, people on average, are getting higher after-inflation incomes. Here are the following GDP numbers:
$59.5 thousand in the first quarter of 2017 (the start of the Trump Term);
$61 thousand in the first quarter of 2021 (the end of Trump, start of Biden);
$67.7 thousand in Q1 2024. (basically now).
All the numbers are expressed as 2017 dollars, meaning they are inflation-adjusted.2 The numbers can be read as if, for example, the average American made/produced $59,500 of GDP in Q1 2017. As we can see, despite Covid, GDP per capita grew during Trump’s Term. It has grown even more sharply - even after inflation - in the 3.25 years of the Biden term. It is a pretty clear-cut case. Many financial analysts and economists are mystified why people claim to believe that we’ve never been worse off, when in fact we have never been better off, at least economically. The stock market has been soaring, housing prices are astronomical. Perhaps people are angry about this rather than glad, inflation makes people angry, but the performance of the economy during Biden’s tenure has been quite good for most people.
I don’t attribute all this to Joe Biden. Maybe we had an explosion of real spending after Covid and we’ll have a bust - at some point. I’d imagine that our next president, whether it is Kamala Harris, Donald Trump, or someone else, will be faced with a worse situation. Trump’s policies are clearly inflationary (tax cuts, and tariffs that raise the price of foreign goods). We have many problems we need to fix, some of which I’ve written about related to infrastructure and the fragility of our country. Biden has been in Washington in some capacity for a very long time. He is a very decent man, but is as complicit as any senator it getting our country to this point. He also deserves a great deal of credit and respect. He has mine.
I read the entire transcript of the debate so you won’t have to.
I obtained numbers from the Federal Bank of St. Louis site (FRED).