In his most recent book, What Lies Ahead When There Is No Future?, Hegelian philosopher Slavoj Zizek recounts an almost certainly apocryphal tale about Zhou Enlai, the former Chinese foreign minister.
“When, in 1953, he was in Geneva for the peace negotiations to end the Korean War, a French journalist asked him what he thought were the effects of the French Revolution. Zhou replied: ‘It is too early to tell’.”
In a way, that was right. It is self-evidently impossible to tell how history will judge a leader, many years hence. But while there are still some months to run for the presidency of Joe Biden – and indeed he may serve a second term – one can at least evaluate how effective he has been at, first, passing policy, and second what the effects thereof have been on the economy.
A hyperactive Biden
As Tim Cohen has written, in the case of Biden there can be little doubting his remarkable ability to enact legislation.
In terms of laws passed, he may well be the most consequential Democratic president since Lyndon Johnson. The American Rescue Plan, the Inflation Reduction Act, last week’s Ukraine aid package and a vast infrastructure binge all form part of Biden’s list of important (and expensive) laws.
But to Enlai’s point, it is far too early to tell what the lasting impact of such a grand industrial strategy will be. Perhaps it will transform the US into a green, egalitarian utopia, as Democrats seem to believe. Or it could all be torn up by his successor.
This will be a debate for the economic historians of the future.
Economic record in power
It is possible, however, to gauge the specific effects of Biden’s policies on the economic data during his tenure.
According to the White House, the main effect of Biden’s economic record was creating jobs. It is inarguable that America’s labour market has consistently beaten expectations since the pandemic. The unemployment rate is lower than in any year since 1969, while the share of employed 15- to 64-year-olds has surpassed its pre-pandemic peak.
Biden likes to argue that his presidency, which began amid a rapid recovery from Covid lockdowns, has coincided with more monthly job creation, on average, than any other in history.
Biden unsurprisingly likes to attribute such ebullient job creation to the $1.9tn “rescue plan” he unleashed shortly after taking office in early 2021. It consisted of nearly a third of America’s total pandemic-related fiscal stimulus, which in total was worth an astonishing 26% of GDP.
This was more than twice the average in the developed world and exponentially more than what developing countries like South Africa could muster.
Yet placing his record in a global context reveals how false this claim is.
In the US, working-age employment rates surpassed pre-pandemic highs only in 2023, eking out roughly 0.55% total employment growth annually over the past five years, according to Bloomberg.
Meanwhile, in Canada, France, Germany and Italy, working-age employment rates surpassed pre-pandemic highs by the end of 2021; Japan followed in 2022.
That employment bounced back in other economies faster proves that America’s jobs recovery had more to do with the unusual nature of the pandemic recession, brought about by lockdowns, than with Biden’s colossal stimulus.
Instead, the main effect of Biden’s fiscal haemorrhage was inflation.
The stimulus launched by him in 2021, when the economy was already recovering from lockdowns, was akin to throwing petrol on the kindling of inflation.
By March 2022, “core” consumer price inflation, which excludes energy and food, was over 5.5%, compared with barely 1% when he took office. This was significantly higher than in other G7 countries and its acceleration coincided with the introduction of the stimulus.
More worryingly, inflation in the US is proving to be stickier than the Federal Reserve had hoped.
Prices rose 3.5% in the March consumer price index which followed a 3.2% gain a month earlier. It is also proving more stubborn than inflation in other similar economies, such as the eurozone.
For the first time in post-war America, real per capita incomes in the US are lower today, at $53,000, than they were in 2020, at $60,000, according to data from the Federal Reserve.
It is no surprise that, according to the latest FT-Michigan Ross poll done in March, 42% of Americans feel they are worse off under Biden compared with only 20% who feel they are better off.
The poll found that inflation remained the biggest source of stress for 80% of voters, down only marginally from 82% in November.
Such naïve and reckless economic policy may then lead to what will be Biden’s eventual legacy – a second Trump presidency. More voters trust Trump over Biden on the economy, with 40% saying they trusted his handling compared to 34% for Biden, according to the same poll.
This is where my take differs from that of Tim Cohen. History could judge Biden as a well-meaning democrat, who, despite his best intentions, ended up having a disastrous impact on his country.
As Yeats wrote, he may well be an instance of “how the best lack all conviction, while the worst are full of passionate intensity”. DM
“Such naïve and reckless economic policy may then lead to what will be Biden’s eventual legacy – a second Trump presidency.”
“This is where my take differs from that of Tim Cohen. History could judge Biden as a well-meaning democrat, who, despite his best intentions, ended up having a disastrous impact on his country.”
You can only conclude that Biden intentions might end up being disastrous if they result in a second Trump presidency if you already know that a Trump presidency will be disastrous.
Nobody knows that, unless they are prophets.
The inflation in the USA was caused not only by your so-called “well-meaning but disastrous President” but by factors outside Biden’s control, such as global supply-chain problems going back to the Reagan years.
The fact that 42% of Americans “feel” they are worse off now is a meaningless metric since 50% of Americans “feel” that Trump was sent by Jesus to male America great again.
Well said. Thanks.
Amen
Thanks Paul! Appreciate the comment and thanks for reading. A good point, as you say there were other (global) supply side factors, but the fact that inflation in the US was not only higher but has also proven more persistent than elsewhere (such as the eurozone) is the effect of the (US specific) Biden stimulus demand side effects.
Correct, the massive stimulus undoubtedly led to massive spending in a consumerist economy, with the burn led by retailer margins and property as much as by administered costs. There are other considerations:
(a) US Presidential politics: president have been claiming economic success forever, including Trump claiming Obama’s legacy (pre-Covid);
(b) Political pressure: Trump would have done the same (stimulus), perhaps only with slightly different emphasis on flavour of pork (Pipeline X, no green);
(c) European recovery in unemployment was faster due to a huge post-Covid exit of part of the labour force. Job-seeker definitions are important.
But most worrisome of all is that it appears to have dawned on the Democrats that while the Republicans have always talked up fiscal responsibility they long ago stopped applying same. Republicans simply cut taxes but continued loading pork – a populist strategy that seemingly carries no repercussions from the political base. Simply blames the other side. So now we have two parties blowing the budget. Trump was (and will be) even wilder on this front, whatever the rhetoric spewing forth from republicans.
Biden’s term is pretty much in the rear-view mirror, the question is what lies ahead? Perhaps again Biden, maybe overseeing the eventual reduction in inflation cycle, or Trump enjoying that benefit. But then again maybe not: will the world will be less safe: cost of (more, worst) war, with an untethered Russia et al?
Yes let’s put a despicable thug & criminal back in the presidency because some rich capitalists didn’t make enough money! Make it make sense
As opposed to this guy who is hellbent on destroying the middle class and starting the WW3?
I am classic liberal by conviction and pains me DEEPLY to say this, but it has to be said. I really hope that Trump wins, as the way we are going is a one-way street to apocalypse….
You hoping he is not convicted in court and spending time in jail ? One good thing … at least he will have the presidential security services with him .. in jail ! Not sure who will apply that agent orange on his face though ?
“Joe Biden has been a well-meaning but disastrous US president”
Having taken over from a “self-serving and disastrous US president” who led to the unnecessary deaths of a thousands of Americans, for a start, I think he’s done quite well even if he is a bit old. At least he’s not Trump, but the main problem is the low IQ of way too many yanks, who believe any old bulldust they’re fed by a liar like him.
Such naïve and reckless economic policy may then lead to what will be Biden’s eventual legacy – a second Trump presidency.”
“This is where my take differs from that of Tim Cohen. History could judge Biden as a well-meaning democrat, who, despite his best intentions, ended up having a disastrous impact on his country.”
You can only conclude that Biden intentions might end up being disastrous if they result in a second Trump presidency if you already know that a Trump presidency will be disastrous.
Nobody knows that, unless they are prophets.
A thoughtful article with certainly some measure of truth although I agree with @Paul(Teacher) that there are assuredly economic factors that were/are outside of Biden’s locus of control. I am surprised however that the Natale has focused solely on economics when other aspects of Biden’s presidency are also worth looking at; particularly his foreign policy and rhetoric. Whilst I am no informed expert, it appears that he came into office hitting the ground running to repair international relations which his (wrecking ball of a) predecessor often eroded and he did okay there. Anything is better than Trump I guess. My issue with Biden is that he is insincere. He uses the language of someone who cares but his actions often fall short. Gaza/Isreal is a key point and I believe that is where his true future judgment will arise from. I understand that the US cannot (at least openly) dictate to other countries what to do, but by not enforcing his significant influence over Isreal earlier in objecting to its military actions, Biden has scored a serious own goal on his legacy. But America loves its wars and Biden is probably keenly aware of this.
Thanks JDW, appreciate the comment and thanks for reading. I decided to focus on the economic side of Biden’s presidency for this piece, one cant cover everything in 800 odd words. However I could not agree more with your point on his hypocritical, misguided and self-defeating foreign policy. For my take on it, Google my piece from 11 Jan 2024 “Biden’s stance on Israel could lead to Trump’s re-election”
How else will it ‘drive’ its ‘economy’ (which I know nothing about) if not for the arms industry … currently running at about 60% of world supplies ! ! Your comment about his “insincerity” is apt … BUT totally ineffectual … insofar as he is supposed to be the ‘face’ of the ‘enlightened or progressive’ wing of American politics ! Instead he has disgracefully displayed his ‘white supremacist’ half, by endorsing the genocidal Netanyahu regime (not Israelis in general) and even labeled the progressive anti-war students in the US (including Jewish ones) as anti-semetic, and unleased vicious police violence against largely peaceful students and their teachers … almost IDF style ! AND he has several democrats who should know better, supporting his despicable actions/words. Can you believe it that the only democrat who seems to have any moral compass, is a Jew called Bernie Sanders ? Biden cynically uses descendants of slaves as the ‘face’ of his party … and they agree to it, because they think they have ‘made it’ into the ‘good books’ of their masters ! Shameful and shameless !
America does not only “love its wars” but positively ‘thrives’ on it … in more ways than one ! It even encourages gun ownership amongst its own people who can then use it in their own regular civil massacres ! Which other country has deliberately started ‘wars’ (camouflaged in colourful language) like defending ‘democracy’ and the ‘free world’ and opposing the ‘axis of evil’ etc. etc ! ? Also ‘demonising’ those who disagree with them with labels like terrorist/s (as defined by the US!) ? Giving new meanings to anti-semitism ? Hiroshima/Nagasaki, Vietnam, Iraq, and most recently Afghanistan are just a few examples of the hubris (thanks Beinart) that drives America!
Real per capita GDP is not lower now than before Covid. Both the World Bank and the Louisiana Federal Reserve Bank show that real GDP per capital already surpassed pre-Covid levels at the end of 2022 (by 6% and 3% respectively). So American’s are clearly not worse off under Biden, high inflation simply makes them believe they are.
There is little doubt that his post-Covid stimulus splurge is the main contributing factor to America’s persistently high inflation. But Biden’s legacy will be defined by misguided (and costly) industrial policy, his expanding of the Trump-started trade war against China and his refusal to make way for a younger, more viable presidential candidate.
Apologies Willem, good spot. I meant to write Real Disposable Personal Income Per Capita which according to St Louis Fed data is lower today than early 2021.
Natale, you’re cherry-picking the St Louis Fed data here. Real Disposable Personal Income Per Capita in the US spiked during the pandemic because of the (temporary) stimulus payments to households, so using early 2021 is not a good starting point for your comparison. Comparing Jan 2020 to Jan 2024 shows a significant increase in Real Disposable Personal Income Per Capital, not a decline. Over the same period, real hourly wage growth in the US has surpassed the inflation rate.
Your inflation comparisons between the US and Europe are also misleading. The US core inflation rate was higher than the (19-country) Euro area inflation rate in March 2022 but by the end of 2022 the Euro area inflation rate had caught up. The two regions had virtually identical rates between Jan 2020 and Jan 2024, although real GDP growth in the US was far higher.
One can debate how much credit Biden deserves for the US economic performance over the past 3.5 years, but by any measure (and contrary to those who were predicting a recession), the US economy has done remarkably well.
Hi William, thanks for the comment and for reading!
1) I used early 2021 as that was when Biden was elected. My point is precisely that; those stimulus measures distorted earnings profoundly.
2) I used March 2022 as that was peak Core in the US. Inflation in Europe was a different beast. It came later, and data now shows it was as much a product of high energy prices post the invasion of Ukraine and pass-through then supply side factors. There is a whole literature on this I would be happy to share (look me up on linkedin). There was simply nowhere near the same demand side pull inflation that happened in the US with Biden’s stimulus measures in 2021, which entailed sending checks to consumers in an economy at full employment and already exiting the pandemic.
3) Your point on growth is fair, but surely growth is always going to happen if a government runs recession-level deficits at full employment? The point is that people, as a result of the inflation which is an obvious consequence of such careless fiscal policy, end up feeling worse off. That in turn could compel them to vote for Trump, which would be in my mind a “disastrous” outcome. If Biden has been more responsible with his fiscal policy, and not passed that entirely unnecessary 2021 stimulus, there can be little doubting inflation would be lower and a second term, therefore, could have been looking far more likely.
Feelings are not facts, though they do drive people to make poor choices. Biden inherited a poisoned chalice…not only a tanked economy, but an America riven by hatred, and craziness by bitter political opponents more driven by their determination to crash their country under his leadership than to try to work in a bi-partisan manner to rebuilt his predecessor’s catastrophic legacy. Biden also took his country back into world politics after the scarring and pitiful Trump presidency. Perhaps these things cannot be quantified in monetary terms (although the inflation issue in America has been greatly over-egged) – but there is a simple way to measure a presidency: did he leave the country better off not only domestically but globally? Were bad choices sometimes made? Yes – by most leaders. But this sounded quite condescending in a fight for decency and a better world; respecting of course, your opinion.
The greatest challenge that Biden will have to face and the historic ‘legacy’ he will leave, is the one called “Genocide Joe” … for buying into and giving succour to BBs genocidal agenda ! If he lives long enough, he may yet face the next ‘Nuremberg’ as an accomplice ! Greater the pity that the ICC has not yet had the guts to issue an arrest warrant for at least BB .. and his murderous/unaccountable gang .
This is a “fear of zombies” argument. See Dara Ó Briain’s fear of zombies skit.
Natale have you really considered the multiplier effect? Of course there will be an inflationary aspect but here are some multiplier effects that I think have to be taken into consideration:
1. Direct payments to individuals, a high multiplier, as individuals are likely to spend the money on goods and services, leading to increased demand and economic activity.
2. Extending unemployment benefits: While the multiplier for this component may be lower than direct payments at least those without employment could participate in the economy.
3. Aid to state and local governments: This probably prevented layoffs of public sector employees and maintained essential services which in turn supports economic activity in the communities affected.
4. Funding for COVID-19 testing and vaccination efforts which helped to control the spread of the virus
In addition some notable economists supported the stimulus including Janet Yellen, Ben Bernanke and Lawrence Summers.