In his much-hyped State of the Union Address, Joe Biden proclaimed the American economy as the envy of the world. Leading economists concur with the president’s view. Paradoxically, doom, gloom, and anger depict the perception of a majority of Americans towards their economy.
Pessimism remains high despite undeniable evidence to the contrary. Unemployment rates are low, inflation levels have plummeted, though they persist, wages are rising, the stock market is reaching new all-time highs, and the Federal Reserve's contractionary monetary policy measures are likely to avert a recession.
Affordability concerns endure because time, along with the implementation of working-class-friendly public policies and a geopolitical focus on strengthening the resiliency of global supply chains, is required to bring the cost of living down.
Since 2022, voters have placed economic issues, particularly inflation and employment, at the top of their minds. Swing states, like Michigan and Arizona, will determine the outcome of November’s presidential election. The health of the American economy, or more precisely, perceptions of it, is being touted as the most decisive voting issue in these battleground states.
Public opinion polls indicate Donald Trump has a lead over Biden in terms of who would better manage the economy. The solid pre-pandemic economic performance under Trump contrasts with the prevalent belief held today that pocketbook expenses have skyrocketed under Biden, which, without further analysis, is an accurate assessment. Yet many fail to pay heed to the full international storyline, erroneously perceiving the American economy as going to tatters.
Under Biden, high inflation has dominated headlines, a trend not unique to the United States but observed worldwide. Globally, incumbents have become unpopular, due to two factors: The spillover effects of an unprecedented public health calamity and the war in Ukraine.
Biden, who inherited an economy shaken by the pandemic, is now labeled as the alleged enabler of current economic woes. Indeed, an inclination to attribute all the United States' affordability challenges to its president is a partisan, politically preferential, and rhetorically useful messaging tactic that deliberately overlooks the complexities of the American economy.
Biden's docile handling of the chaos that has rampaged throughout the Middle East is eclipsing his economic triumphs. Pro-Palestinian supporters suggest that he is complicit in Benjamin Netanyahu’s plausibly genocidal response to the October 7 terror attacks by Hamas. Pro-Israeli groups argue that Biden is succumbing to terrorist sympathizers by voicing his concerns about how Netanyahu’s war on Gaza tests, and possibly exceeds, the limits of international humanitarian law and is resulting in the death of too many Palestinians.
And of course, there is the age issue. Biden is old. At times, he looks frail and tired. He is prone to gaffes. His cognitive abilities have been questioned. He stutters, something which has been mocked tastelessly by his opponents. Campaigning will take a toll on him. On the age issue, he will not sway voters.
Two questions warrant introspection: In the coming months, should Biden prioritize promoting his economic narrative to undecided voters? And if he chooses to do so, can this narrative effectively convey why he is the preferable choice over Trump?
To his credit, Biden's first term has featured tangible policy interventions and evidence-based programs that go beyond rhetoric, beginning to make a difference on a macroeconomic scale, even if not at the household level.
Philosophically, Biden’s economic agenda represents a pathway that flirts with the idea of incrementally moving the United States away from neoliberalism, still inherently capitalistic in ambition and objective, but one that will place regulatory emphasis on restructuring a pro-rich tax system in dire need of reform, provide more incentives towards environmentally-sustainable manufacturing, renew emphasis on blue-collar jobs with the backing of labour unions, hold big pharma accountable to the extent that is viable, reduce if not eliminate student debt, and increase public sector investments in schools, transportation, and other infrastructural schemes.
The bottom line being: President Biden is implementing a pretty bold policy plan, arguably one of the most progressive economic agenda since the New Deal. Beyond other metrics, the core challenge for Biden is that, while inflation has decreased, it has not reversed. Prices have not returned to pre-pandemic levels, making it difficult to convince voters of improving economic conditions.
Donald Trump, it must be acknowledged, does a better job at boasting about his record, whether accurate or not. For many struggling to make ends meet, Trump's flamboyant strongman rhetoric holds more appeal than the Biden team spewing out boring, but credible, economic facts. As a result, economic confidence under Biden is much lower than under Trump.
Unfortunately for Biden, the pre-pandemic economy of 2019 serves as a benchmark, despite the economy having been on an upswing when Trump assumed office, benefiting from a recovery initiated during the Obama Presidency. The economy grew modestly under Trump until the pandemic hit in 2020. Stimulus cheques issued by his administration offered temporary support to Americans during the pandemic.
There was considerable growth in the stock market from 2016 to 2020, a trend that has carried on under Biden. However, Trump's signature economic policies, such as tax cuts and the imposition of tariffs, have had minimal impact, with some credible studies suggesting they may actually have been detrimental to the United States.
Biden's efforts to stave off a recession while the country was recovering from the pandemic appear to be showing signs of success. Granted, some of his policies have contributed to an inflationary spiral, a situation seen in countries like Canada, which prioritized rapid financial assistance to citizens over long-term fiscal stability.
Nevertheless, the United States has managed to control inflation more successfully than other developed nations, maintaining lower unemployment rates and higher wage growth. Credit goes to the Federal Reserve for strategic, but unpopular, interest rate hikes.
But beyond the success of monetary policy tools, Biden's legislative feats as well as attempts to alleviate pandemic-induced supply chain issues, have played a salient role in stabilizing the economy. Many voters have yet to fully recognize these achievements. And it is unlikely that they will in time for November’s Presidential election.
Economic growth under Biden, driven by consumer spending and the Federal Reserve’s inflation control tools, has exceeded projections. Despite inflation levels falling from its peak, it remains above the Federal Reserve’s target rate.
On a positive note, with wages growing faster than inflation, the impact of higher prices on Americans is beginning to ease slowly but surely. Yet, the memory of peak inflation and unequal wage growth presents hurdles for Biden.
Unemployment is at its lowest since 1969, and the United States added a record number of jobs in 2021, a trend that, albeit slower, continued into 2023. The stock market's new highs reflect investor optimism about an even more robust economic landscape in the coming months.
After a pandemic-induced increase in savings rates, Americans are now saving less than before the pandemic, driven by higher costs, increased interest rates, and resultant higher borrowing costs. Regardless of these challenges, consumer spending remains vigorous, benefiting sectors like restaurants, airlines, and hotels.
However, the sustainability of this trend is questionable as Americans dip into savings and accumulate record-high credit card debt. Many long for the Trump-era 2019 economy, marked by greater cash availability and less reliance on credit. And honestly, who would not? While economic indicators generally favour the Biden administration, convincing voters who reminisce about the Trump era remains difficult to near impossible.
To his credit, Biden's outlined fiscal policy vision, hailed as fundamentally populist in nature by many policy practitioners, seeks to change these perceptions. His proposed $7.266 trillion budget focuses on supporting the middle class and contrasts sharply with Republican policies. It includes tax increases on large corporations and the wealthy, aiming to reduce the deficit by $3tn over 10 years and lower prescription medication costs.
The budget also proposes national paid leave and advancements in cancer research. This budgetary strategy, coupled with the realities of a robust job market, persistent inflation, a pressured housing market, a booming manufacturing sector, and soaring stock prices, underscore Biden's effort to shift public opinion.
According to the 44-year-old political commentator Mehdi Hasan, Biden's domestic achievements stand out as the most impressive in his lifetime. Certainly, the list of Biden’s legislative wins is noteworthy: The American Rescue Plan, the Inflation Reduction Act, the Bipartisan Infrastructure Agreement, a landmark gun control Act, the CHIPS Act, the PACT Act -- the list goes on.
To the surprise of many, Biden has also put forth the most ambitious climate action plan in human history. The president, recognized as the quintessential centrist with a track record of seeking to work across the political aisle, has concentrated on legislative reform.
The concluding part of this Long-Form will be published tomorrow
Mir Aftabuddin Ahmed is a Toronto-based Public Policy Columnist for Bangladeshi and Canadian media outlets. He serves as an Urban Fellow Researcher with the City of Toronto and is the co-founder of BacharLorai, a Canada-based not-for-profit social impact agency. He can be reached at [email protected]. The views expressed in this article are personal opinions and do not reflect the views or opinions of any organization, institution, or entity associated with the author.
