It is frequently stated that presidents receive too much praise or too much criticism for the state of the American economy, but the public always comes to its own conclusion. It returned Donald Trump to the White House and awarded Kamala Harris and Joe Biden a failing score.
Voters finally gave Republicans complete control of Washington after blaming the departing Democratic president and vice president for soaring inflation, despite the fact that the economy is performing rather well by most metrics.
These are the economy’s high peaks and significant low points over the four years of the Biden administration.
Monday at noon marks Biden’s departure from office as a one-term president.
The rate of inflation
In the end, the Democrats’ attempt to hold onto the White House was destroyed by the biggest inflation in forty years.
When Biden began office in January 2021, the annual rate of inflation was a pitiful 1.4%. By mid-2022, it had risen to a nine percent peak. Inflation was at its worst since the early 1980s.
There has been intense discussion on how much of the inflation spike can be attributed to Biden, and this discussion is probably going to continue for years.
Critics blame Biden’s multitrillion-dollar economic stimulus and other spending during his first few years in office, while supporters blame the COVID-19 outbreak and the supply-chain disruption while economies recovered from shutdowns.
Since then, the annual rate of inflation has dropped to less than 3%, and it is still close to both the Federal Reserve’s long-term target and its prepandemic levels. However, compared to four years ago, the cost of basic necessities like food, housing, auto insurance, and cars has increased significantly.
GDP
During the Biden years, the U.S. economy has expanded quickly, if not sufficiently to preserve his political fortunes and approval ratings.
In 2021, the GDP, which is regarded as the official economic scorecard, increased by 6.1%. The Biden stimulus and the subsequent recovery from the coronavirus outbreak drove the growth boom.
GDP increased 2.5% in 2022, 2.9% in 2023, and probably around 3% in Biden’s last year in office.
The first three years of Trump’s first term as president saw the U.S. economy grow at a similarly above-average rate. The economy was severely impacted by COVID-19, which was officially declared a pandemic in March of the 2020 election year. Trump’s reelection that November was probably harmed by his management of the outbreak.
The economy has profited most from low unemployment, growing earnings, and solid consumer spending, even while increased government spending has contributed to the strong GDP.
Employment and joblessness
Although the United States added an astounding 16.6 million jobs during Biden’s four years in office, analysts point out that the recovery of millions of jobs lost during the epidemic accounted for more than half of the growth.
In contrast, the COVID era had comparable fluctuations in the unemployment rate.
By the time Biden took office, the unemployment rate had fallen to 6.4% from its peak of 14.8% during the pandemic. After that, it gradually decreased to 3.4% by 2023 as the United States completely recovered from the pandemic.
Under Trump, the unemployment rate was also at a record low of 3.5% just prior to the pandemic.
Even if the unemployment rate has recently increased to 4.1%, it is still incredibly low when compared to previous periods.
Accommodation
Early in the Biden administration, the Fed lowered interest rates to exceptionally low levels, which caused the housing market to soar.
Prices rose as a result of record-high sales of both new and pre-owned homes, while tens of millions of families refinanced at extremely low interest rates.
The Fed increased borrowing costs and mortgage rates skyrocketed when inflation took hold. Builders reduced building, home sales plummeted, and the already severe housing crisis worsened.
As a result, housing affordability in a large portion of the United States may be at an all-time low. Four years ago, the average 30-year mortgage rate was less than 3%; today, it is 7%.
According to an Atlanta Fed index, housing expenses consume almost 45% of a median family’s income, which is significantly higher than the 30% rate deemed more typical.
Deficits in the budget
Since COVID, massive U.S. budget deficits have been the norm, and they don’t appear to be abating.
The current fiscal year is on track to surpass the $1.8 trillion budget deficit from the previous fiscal year, which concluded in September.
Meanwhile, the national debt has skyrocketed. In the current fiscal year, that deficit is expected to surpass $37 billion, a 64% increase from the $22.6 billion it was before to the pandemic.
Interest rates in the US could remain high due to persistently huge deficits. Additionally, they are making it more difficult for the government to fund essential operations.
For the first time ever, the interest that the United States must pay on its national debt may surpass $1 trillion this year. The cost of interest payments now exceeds the annual government spending on the military.
Despite Trump’s pledge to cut deficits, current government predictions indicate they will remain extremely high.
