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Tuesday, March 05, 2024 8:05:21 PM
Trump versus Biden: Which president was better for the US economy?
"Att: hap0206 Data Don’t Lie: Biden’s Economic Record is Much Better than Trump’s"
Related: About the NZZ
Switzerland's top newspaper is now bringing a curated selection of English-language articles to a global audience.
https://www.nzz.ch/english/about-the-nzz-ld.1612911
The NZZ examines economic developments in the United States over the course of the last two
presidencies, and discusses what these experiences might mean for the election in November.
Florian Seliger February 27, 2024
Illustration Joana Kelén / NZZ
With graphs
The next presidential election in the United States is likely to be one of the strangest duels of all time. President Joe Biden's challenger will almost certainly be Donald Trump. Will the loser of the last election become the winner in November?
«It's the economy, stupid!» According to this rule of thumb from the Clinton era, it is the economy that determines the outcome of the U.S. election. And according to surveys by opinion research firms .. https://news.gallup.com/poll/1675/most-important-problem.aspx , Americans still consider economic development and inflation to be the most important issues in the U.S., alongside immigration.
What does the current economic situation mean for the duel between Trump and Biden? Below, the NZZ takes a look at the most important data.
1. Inflation and purchasing power
Inflation has been a major concern for many Americans in recent years. The sharp rise in prices over recent years had its roots in the coronavirus pandemic, and can be traced specifically back to supply bottlenecks and billion-dollar aid packages .. https://www.nzz.ch/wirtschaft/acht-prozent-die-inflation-in-den-usa-ist-immer-noch-viel-zu-hoch-ld.1707163 , among other factors. The peak was reached in summer 2022, with price increases of over 9% in some cases compared to the previous year.
At the moment, prices are no longer rising so sharply. However, the current core inflation rate remains above 3%, and thus above the central bank's target of 2%. Since January 2021, prices have risen by a total of 19%.
IMAGE .. Inflation rose sharply during the coronavirus pandemic
Monthly U.S. consumer prices, year-on-year change, in percent
Consumers have lost considerable purchasing power as a result of these price increases. Between April 2021 and April 2023, wages fell in real terms – that is, when inflation is taken into account. They have started to increase again only since last summer.
The electorate will probably cast the most blame on Biden, as the inflation rate skyrocketed during his term of office. The fact that real wages effectively stagnated in 2017 and 2018, and are now higher than in the pre-pandemic Trump era, is unlikely to be of any help to him.
Americans regain purchasing power
IMAGE -- Monthly change in U.S. real wages compared to the same month of the previous year, in percent
2. Unemployment
The labor market has shown more positive developments than prices have, although in spring 2020 more people were unemployed than at any time since the Great Depression in the 1930s. During the COVID-19 pandemic, the unemployment rate rose to 15% because stores and restaurants were closed in many states. The U.S. did not have a state-funded income support program that allowed companies to cut employees' hours but keep them on the payroll, as was done in Switzerland and Germany. Instead, U.S. companies largely laid workers off.
However, the U.S. labor market has been developing very strongly for about two years. By the beginning of 2024, the unemployment rate had fallen to just 3.7%.
IMAGE -- The unemployment rate remains low
Monthly U.S. unemployment rate, in percent
3. Economic growth
Economic growth has also been stronger than many analysts had expected. In 2023, the economy grew by 2.5% despite a high key interest rate of over 5%, which makes loans more expensive for companies and households. By way of comparison, the economy grew at a similar rate in the first Trump years, but the key interest rate at the time was between 0.6% and 2.4%.
This growth is being driven by strong consumption, investments in production facilities and infrastructure spending .. https://www.whitehouse.gov/cea/written-materials/2023/12/19/ten-charts-that-explain-the-u-s-economy-in-2023/ . By 2021, the U.S. economy had already more than made up for the pandemic shock of 2020.
IMAGE -- The U.S. economy is robust
Quarterly GDP growth, annual rates in percent
4. Debt
However, government spending on infrastructure is creating new deficits in the federal budget. The U.S. is already sitting on a gigantic mountain of debt of over $34 trillion. During Barack Obama's time in office, public debt stocks rose above 100% of GDP for the first time since World War II, and they are now even higher.
Obama's successors did little to limit government expenditure. On the contrary, Trump's tax reform, three large pandemic aid packages, and finally Biden's subsidies and support programs for renewable energies and infrastructure have cost trillions.
IMAGE -- U.S. national debt continues to grow
National debt, as a percentage of GDP
5. International trade and direct investment
Trump's promise to working class Americans was to bring industrial jobs back to the United States. To this end, he instigated a trade war with China and imposed punitive tariffs on American trading partners. He also lowered the tax rate for companies from 35% to 21%.
As a result of his tariff policy, the volume of imports from China has fallen sharply. Seven years ago, these trade flows accounted for almost one-quarter of all imports into the United States. In the fourth quarter of 2023, this figure was only 14%. However, some Chinese products are also entering the U.S. via third countries.
IMAGE -- Dependence on China has decreased
U.S. imports from China, as percent of all imports
Biden has continued this protectionist approach. Although he suspended the tariffs on steel and aluminum from Europe, he has proved as intransigent toward China as his predecessor. Much more important, however, is his Inflation Reduction Act, which offers tax deductions on electric cars, for example. The discount is only available if final assembly of the cars takes place in North America .. https://www.nzz.ch/pro-global/der-naechste-handelskrieg-unter-anleitung-von-berlin-versucht-die-eu-ihre-autoindustrie-vor-der-amerikanischen-inflation-reduction-act-zu-schuetzen-ld.1712144 .
European companies are therefore investing heavily in factories in the United States. No other country in the world attracted more foreign direct investment in 2022 and 2023, with $265 billion invested in the U.S. between January to September 2023 alone. However, momentum appears to have slowed somewhat in the second half of 2023. According to Nobel Prize-winning economist Paul Krugman, who leans politically to the left, Biden has been more successful than his predecessor in creating new manufacturing jobs. By contrast, studies indicate that the tariff policies have not led to any new jobs.
IMAGE - Foreign companies continue to invest heavily in the U.S.
Foreign direct investment in the U.S. as a share of quarterly GDP, in percent
The Trump era also saw ups and downs in terms of direct investment. On the one hand, Trump's policies likely scared off foreign entrepreneurs. On the other hand, his corporate tax reform likely attracted investment.
6. Energy transition
Climate policy is the issue on which the positions of the presidential candidates are furthest apart. As is well known, Trump does not believe in climate protection or renewable energy, and withdrew from the Paris Climate Agreement of 2015.
Biden corrected the policy of his predecessor. The U.S. rejoined the climate accord early in 2021. Biden's Inflation Reduction Act .. https://www.nzz.ch/international/bidens-klimawunder-verbluefft-ld.1784963 .. contains $369 billion in subsidies and tax breaks for renewable energies, battery factories and electric cars. The Infrastructure Investment and Jobs Act is intended to help expand the electricity grid, install charging stations and purchase electric buses. It carries a price tag of $550 billion.
Small successes are can already be seen. According to estimates by the independent research provider Rhodium Group, CO2 emissions in the United States fell by 1.9% in 2023 compared to the previous year. And for the first time, more than 1 million electric cars were sold in the country.
IMAGE -- The number of electric cars on American roads is rising
Sale of electric cars in the U.S. (in millions)
However, Biden is not a radical environmentalist. Under Trump and Biden, the United States has become the world's largest producer of fossil fuels .. https://www.nzz.ch/wirtschaft/die-usa-sind-beim-fluessiggas-eine-supermacht-doch-biden-ist-das-nicht-geheuer-ld.1777446 . In 2023, oil production in the U.S. reached an all-time high. The country also exported more liquefied natural gas than ever before.
By contrast, renewable sources still account for a relatively small proportion of total U.S. energy generation. Only solar and wind energy have recorded significant growth in recent years.
IMAGE
7. Consumer sentiment
Thanks to falling inflation rates, consumer sentiment in the U.S. has recently improved significantly, according to a monthly survey conducted by the University of Michigan. The answers to this survey are used to generate a consumer sentiment index score. This score reached its low point in June 2022. Although it recovered significantly at the start of 2024, the index is still around 20 points lower than during the pre-pandemic Trump years.
Another problem for Biden is that Republican Party supporters are in a much worse mood than Democratic Party voters. The consumer index score among Republican voters in January 2024 was at least 45 points lower than the comparable value among Democrats. Dissatisfied voters are more likely to vote for Trump .. https://data.sca.isr.umich.edu/ .
IMAGE -- Consumer sentiment has improved
U.S. consumer sentiment, index values
Nevertheless, the economy may no longer be as important in voting decisions as it used to be, says political scientist Lee Drutman, a senior fellow at the New America think tank. Other experts agree. In any case, the improved public mood and the good state of the labor market have not yet been reflected in Biden's approval ratings. In polls of Americans' voting intentions he has remained slightly behind his presumed challenger for months. This year's presidential race remains wide open.
Please note that this story was machine translated with light editing by our editorial staff.
For more articles in English, visit our homepage or sign up for our free newsletter.
https://www.nzz.ch/english/was-the-us-economy-better-under-donald-trump-or-joe-biden-ld.1819444
"Att: hap0206 Data Don’t Lie: Biden’s Economic Record is Much Better than Trump’s"
Related: About the NZZ
Switzerland's top newspaper is now bringing a curated selection of English-language articles to a global audience.
https://www.nzz.ch/english/about-the-nzz-ld.1612911
The NZZ examines economic developments in the United States over the course of the last two
presidencies, and discusses what these experiences might mean for the election in November.
Florian Seliger February 27, 2024
Illustration Joana Kelén / NZZ
With graphs
The next presidential election in the United States is likely to be one of the strangest duels of all time. President Joe Biden's challenger will almost certainly be Donald Trump. Will the loser of the last election become the winner in November?
«It's the economy, stupid!» According to this rule of thumb from the Clinton era, it is the economy that determines the outcome of the U.S. election. And according to surveys by opinion research firms .. https://news.gallup.com/poll/1675/most-important-problem.aspx , Americans still consider economic development and inflation to be the most important issues in the U.S., alongside immigration.
What does the current economic situation mean for the duel between Trump and Biden? Below, the NZZ takes a look at the most important data.
1. Inflation and purchasing power
Inflation has been a major concern for many Americans in recent years. The sharp rise in prices over recent years had its roots in the coronavirus pandemic, and can be traced specifically back to supply bottlenecks and billion-dollar aid packages .. https://www.nzz.ch/wirtschaft/acht-prozent-die-inflation-in-den-usa-ist-immer-noch-viel-zu-hoch-ld.1707163 , among other factors. The peak was reached in summer 2022, with price increases of over 9% in some cases compared to the previous year.
At the moment, prices are no longer rising so sharply. However, the current core inflation rate remains above 3%, and thus above the central bank's target of 2%. Since January 2021, prices have risen by a total of 19%.
IMAGE .. Inflation rose sharply during the coronavirus pandemic
Monthly U.S. consumer prices, year-on-year change, in percent
Consumers have lost considerable purchasing power as a result of these price increases. Between April 2021 and April 2023, wages fell in real terms – that is, when inflation is taken into account. They have started to increase again only since last summer.
The electorate will probably cast the most blame on Biden, as the inflation rate skyrocketed during his term of office. The fact that real wages effectively stagnated in 2017 and 2018, and are now higher than in the pre-pandemic Trump era, is unlikely to be of any help to him.
Americans regain purchasing power
IMAGE -- Monthly change in U.S. real wages compared to the same month of the previous year, in percent
2. Unemployment
The labor market has shown more positive developments than prices have, although in spring 2020 more people were unemployed than at any time since the Great Depression in the 1930s. During the COVID-19 pandemic, the unemployment rate rose to 15% because stores and restaurants were closed in many states. The U.S. did not have a state-funded income support program that allowed companies to cut employees' hours but keep them on the payroll, as was done in Switzerland and Germany. Instead, U.S. companies largely laid workers off.
However, the U.S. labor market has been developing very strongly for about two years. By the beginning of 2024, the unemployment rate had fallen to just 3.7%.
IMAGE -- The unemployment rate remains low
Monthly U.S. unemployment rate, in percent
3. Economic growth
Economic growth has also been stronger than many analysts had expected. In 2023, the economy grew by 2.5% despite a high key interest rate of over 5%, which makes loans more expensive for companies and households. By way of comparison, the economy grew at a similar rate in the first Trump years, but the key interest rate at the time was between 0.6% and 2.4%.
This growth is being driven by strong consumption, investments in production facilities and infrastructure spending .. https://www.whitehouse.gov/cea/written-materials/2023/12/19/ten-charts-that-explain-the-u-s-economy-in-2023/ . By 2021, the U.S. economy had already more than made up for the pandemic shock of 2020.
IMAGE -- The U.S. economy is robust
Quarterly GDP growth, annual rates in percent
4. Debt
However, government spending on infrastructure is creating new deficits in the federal budget. The U.S. is already sitting on a gigantic mountain of debt of over $34 trillion. During Barack Obama's time in office, public debt stocks rose above 100% of GDP for the first time since World War II, and they are now even higher.
Obama's successors did little to limit government expenditure. On the contrary, Trump's tax reform, three large pandemic aid packages, and finally Biden's subsidies and support programs for renewable energies and infrastructure have cost trillions.
IMAGE -- U.S. national debt continues to grow
National debt, as a percentage of GDP
5. International trade and direct investment
Trump's promise to working class Americans was to bring industrial jobs back to the United States. To this end, he instigated a trade war with China and imposed punitive tariffs on American trading partners. He also lowered the tax rate for companies from 35% to 21%.
As a result of his tariff policy, the volume of imports from China has fallen sharply. Seven years ago, these trade flows accounted for almost one-quarter of all imports into the United States. In the fourth quarter of 2023, this figure was only 14%. However, some Chinese products are also entering the U.S. via third countries.
IMAGE -- Dependence on China has decreased
U.S. imports from China, as percent of all imports
Biden has continued this protectionist approach. Although he suspended the tariffs on steel and aluminum from Europe, he has proved as intransigent toward China as his predecessor. Much more important, however, is his Inflation Reduction Act, which offers tax deductions on electric cars, for example. The discount is only available if final assembly of the cars takes place in North America .. https://www.nzz.ch/pro-global/der-naechste-handelskrieg-unter-anleitung-von-berlin-versucht-die-eu-ihre-autoindustrie-vor-der-amerikanischen-inflation-reduction-act-zu-schuetzen-ld.1712144 .
European companies are therefore investing heavily in factories in the United States. No other country in the world attracted more foreign direct investment in 2022 and 2023, with $265 billion invested in the U.S. between January to September 2023 alone. However, momentum appears to have slowed somewhat in the second half of 2023. According to Nobel Prize-winning economist Paul Krugman, who leans politically to the left, Biden has been more successful than his predecessor in creating new manufacturing jobs. By contrast, studies indicate that the tariff policies have not led to any new jobs.
IMAGE - Foreign companies continue to invest heavily in the U.S.
Foreign direct investment in the U.S. as a share of quarterly GDP, in percent
The Trump era also saw ups and downs in terms of direct investment. On the one hand, Trump's policies likely scared off foreign entrepreneurs. On the other hand, his corporate tax reform likely attracted investment.
6. Energy transition
Climate policy is the issue on which the positions of the presidential candidates are furthest apart. As is well known, Trump does not believe in climate protection or renewable energy, and withdrew from the Paris Climate Agreement of 2015.
Biden corrected the policy of his predecessor. The U.S. rejoined the climate accord early in 2021. Biden's Inflation Reduction Act .. https://www.nzz.ch/international/bidens-klimawunder-verbluefft-ld.1784963 .. contains $369 billion in subsidies and tax breaks for renewable energies, battery factories and electric cars. The Infrastructure Investment and Jobs Act is intended to help expand the electricity grid, install charging stations and purchase electric buses. It carries a price tag of $550 billion.
Small successes are can already be seen. According to estimates by the independent research provider Rhodium Group, CO2 emissions in the United States fell by 1.9% in 2023 compared to the previous year. And for the first time, more than 1 million electric cars were sold in the country.
IMAGE -- The number of electric cars on American roads is rising
Sale of electric cars in the U.S. (in millions)
However, Biden is not a radical environmentalist. Under Trump and Biden, the United States has become the world's largest producer of fossil fuels .. https://www.nzz.ch/wirtschaft/die-usa-sind-beim-fluessiggas-eine-supermacht-doch-biden-ist-das-nicht-geheuer-ld.1777446 . In 2023, oil production in the U.S. reached an all-time high. The country also exported more liquefied natural gas than ever before.
By contrast, renewable sources still account for a relatively small proportion of total U.S. energy generation. Only solar and wind energy have recorded significant growth in recent years.
IMAGE
7. Consumer sentiment
Thanks to falling inflation rates, consumer sentiment in the U.S. has recently improved significantly, according to a monthly survey conducted by the University of Michigan. The answers to this survey are used to generate a consumer sentiment index score. This score reached its low point in June 2022. Although it recovered significantly at the start of 2024, the index is still around 20 points lower than during the pre-pandemic Trump years.
Another problem for Biden is that Republican Party supporters are in a much worse mood than Democratic Party voters. The consumer index score among Republican voters in January 2024 was at least 45 points lower than the comparable value among Democrats. Dissatisfied voters are more likely to vote for Trump .. https://data.sca.isr.umich.edu/ .
IMAGE -- Consumer sentiment has improved
U.S. consumer sentiment, index values
Nevertheless, the economy may no longer be as important in voting decisions as it used to be, says political scientist Lee Drutman, a senior fellow at the New America think tank. Other experts agree. In any case, the improved public mood and the good state of the labor market have not yet been reflected in Biden's approval ratings. In polls of Americans' voting intentions he has remained slightly behind his presumed challenger for months. This year's presidential race remains wide open.
Please note that this story was machine translated with light editing by our editorial staff.
For more articles in English, visit our homepage or sign up for our free newsletter.
https://www.nzz.ch/english/was-the-us-economy-better-under-donald-trump-or-joe-biden-ld.1819444
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