The mixed but positive picture can be attributed (at least in part) to Biden’s own policies and a lesson he took from his time as vice president.
Many on the left have long argued that Washington’s response to the 2007-2008 financial crisis was too small and set the stage for a painfully slow recovery.Economist David Wilcox notes that Biden and his team had that in mind as they crafted their strategy in 2021.They successfully pushed a series of bills through Congress that sent trillions to consumers and business and have directly impacted the country’s economic trajectory.“My view is the administration was not wrong to err on the side of going too big rather than too small,” said Wilcox.The senior economist at the Peterson Institute for International Economics and Bloomberg Economics added that Biden deserves some credit for the solid labor market and strong GDP growth but “I think he gets a little blame for inflation initially having been worse here than on average in peer advanced economies.” Here’s the data behind some of what Biden will tout on Wednesday and some other numbers he may be less inclined to highlight.He is set to speak at 1:00 pm ET in Chicago.
A mixed picture on inflation Lingering inflation is proving to be an especially strong drag on Biden’s political prospects as he struggles with low approval ratings on his handling of the economy.The White House message on that front is to look at the current inflation rate and compare it to the rest of the world.Over the last year , Americans have seen a 4.9% rise in consumer prices.It’s a number that remains significantly above the Federal Reserve’s 2% target but is indeed outperforming the rate in Europe and elsewhere.
The Organization for Economic Co-operation and Development tracks a wide array of countries and pegs the current worldwide Consumer Price Index at 7.3%.But even data promoted by the White House itself shows both sides of the situation.In recent talking points distributed to allies , Biden administration officials charted how core inflation—which doesn’t take food and energy into account—has dropped in the US below several peer economies.
But their graphic also showed clearly that the US was a notable laggard on that same measure throughout 2021.Clearer results on GDP growth The case is somewhat more clear cut when it comes to GDP growth.Since the pandemic hit, the US economy has grown 5.4% while growth in the rest of the G7 is only 1.3%, according to Haver Analytics.
US performance here has been a trend since the beginning of the pandemic — including during the final months of then-President Trump’s time in office.The recent World Economic Outlook from the IMF underscored the continued rocky outlook for the global economy on both the inflation and GDP fronts.It projects global growth will be 2.8% for 2023 before rising to 3% next year.Unemployment A key Biden stat you can expect to hear a lot between now and election day 2024 is that 13 million jobs have been created since Biden took office.But when compared to the world, the trends in the US labor market are broadly similar to the rest of the globe.The US unemployment rate is currently hovering at the same level as pre-pandemic lows—with other countries also returning to their 2019 levels.
Countries like Japan and Germany have lower unemployment rates today but they also had lower rates before the pandemic.Likewise, countries like Italy had higher unemployment rates before the pandemic and that remains true today.The US labor market remans strong even despite an aggressive campaign of interest rate hikes at the Federal Reserve that has yet to be felt in the unemployment rate.A recent report from the Treasury Department argued that Biden’s policies are at least partly to thank for that upside surprise, saying “the actions taken by the Biden Administration meaningfully contributed to the pace of recovery and strength of the labor market.” The report also pointed to some of the limits of these international comparisons by documenting how other economies faced different economic challenges.Europe, for example, had much more direct direct exposure to the effects of the war in Ukraine in the energy sector and elsewhere.
The bottom line, Wilcox notes, is the Biden has overseen an US economy that has outperformed the world on significant measures and on inflation “we’ve really turned the corner a little faster than most other countries.” He notes that he didn’t foresee the rapid growth.
“If you had asked me two years ago in the middle of 2021 would we be in this kind of shape, I wouldn’t have given very high odds on that [and] I think an awful lot of pessimists have been proven wrong.” Ben Werschkul is a Washington correspondent for Yahoo Finance.Click here for politics news related to business and money Read the latest financial and business news from Yahoo Finance While presidents often get too much credit or blame for larger economic trends.
