For years, President Joe Biden was flying west to east with the prevailing winds, economically speaking. During Covid, politicians (primarily Democrats) closed down large portions of the economy. When Covid ended, the economy “grew” because that’s what happens when you go from a partially closed economy to an entirely open one.
Why economists fail to recognize this easy-growth environment is befuddling. Now, in rapid succession, we have a weak GDP report, poor jobs and unemployment reports, another terrible fiscal report, and more awful inflation reports. Horrible data that even the pro-Biden media can’t cover up.
The truth is that Biden’s economic numbers were never any good. And now that the easy-growth environment of the post-Covid era is well behind us, Biden — and the country — face a terrible economic reckoning.
Biden’s Economic ‘Growth’ Has Always Been a Mirage
Before Covid, U.S. GDP reached $20.95 trillion and the Trump administration was achieving real GDP growth of about 2.8 percent annually. Had that rate of growth continued, it would today yield a real GDP of $23.56 trillion. The United States is not close to that number. In fact, first-quarter 2024 GDP reflects annual growth of less than 2 percent from the pre-Covid GDP.
Now, if the U.S. economic situation had deteriorated in 2020 because of long-term fundamental weaknesses, Biden’s so-called “growth” might not look so bad. But that is not what happened. Politicians artificially closed down a strong economy.
When the economy reopened, competent leadership would have gotten us quickly back to where we should have been all along. Instead, we got Biden and people like Jared Bernstein — Biden’s music major-turned-chief economic-adviser who literally has no idea what he’s talking about.
The Trump Administration Accomplished Most of the Covid Recovery
As it turns out, the Trump administration did most of the heavy lifting during the Covid recovery. From the depths of the Covid crisis (Q2 2020) through the end of Trump’s term, real GDP rose by about $1.69 trillion in just six months. Under Biden, GDP has grown by about $2 trillion. But that took Biden 39 months.
Real GDP does not tell the whole story because it is adjusted for inflation but not population growth. All things being equal, a society of 11 people should have a higher GDP than a society of 10. Under the Trump recovery, real per capita GDP increased by $5,028 in just six months. Under Biden, per capita GDP has increased by about the same amount ($5,291) in three-plus years. The Trump administration added $2,514 per quarter back to real per capita GDP compared to Biden’s $407 per quarter — six times stronger performance.
One might argue that Trump benefited as well from the same easy-growth environment during this period. Not so. Many of the government-enforced business closures and restrictions remained in place throughout 2020, the end of Trump’s term.
Moreover, Covid vaccines — a catalyst for much of the “return to normalcy,” particularly in Democrat-controlled localities — did not become widely available until well into 2021. Thus, Trump began rebuilding GDP even while the economy remained partially closed. By contrast, Biden has benefitted from an entirely open economy for several years. In any event, even if both men received the benefit of reopenings, Trump took advantage of it and outperformed Biden six to one.
The Airplane Has Been Losing Altitude for More Than a Year
Under Biden, cumulative inflation is 20 percent. Everyone is aware of the painfully high prices for everything. The Biden administration and its media allies have facially done a better job hiding myriad other distressing economic realities. I say “facially” because Americans nonetheless intuitively understand that the Biden economy is awful.
Employment has been bad for more than a year. Last year at this time, 134.4 million Americans had full-time jobs. That number has dropped to 133.9 million. A declining full-time workforce is not a sign of a healthy economy.
Moreover, the true employment level has always been masked by poor labor force participation data under Biden. Labor participation is an important number because it measures the percentage of Americans who are working. By contrast, the unemployment rate does not measure the percentage of Americans actually unemployed because it excludes from its calculation unemployed people who are no longer looking for work.
Labor force participation was trending upward under Trump before lockdowns. And, post-lockdowns, the Trump administration added 1.4 percent back to labor participation in just eight months. The Biden administration has added just 1.2 percent back to labor participation over the last 39 months. Labor participation still hasn’t fully recovered under Biden and remains below its pre-lockdown level. In fact, labor participation has actually declined under Biden over the last eight months.
According to court data, total bankruptcy filings increased by 16.8 percent in 2023. Business bankruptcies increased by a whopping 40 percent. Similar increases in U.S. bankruptcy filings were reported again in the first quarter of 2024.
Over the last year, six major U.S. banks have failed. In truth, bank failures are not that uncommon. However, the Biden bank failures are unique. By asset size, three of the four largest bank failures in U.S. history — Silicon Valley Bank, First Republic Bank, and Signature Bank — have occurred in just the last year. For context, according to a Forbes analysis, the 157 banks that failed in 2010 due to the mortgage crisis combined had less than one-half the assets of either Silicon Valley Bank or First Republic Bank alone.
Even the GDP numbers that Biden touts have, in reality, been rocky and poor for quite some time. Over the last nine calendar quarters, the United States has experienced two quarters of negative growth (-2.0 percent, -0.6 percent), the most recent quarter of poor growth (1.6 percent), and four additional quarters below the Trump pre-lockdown average of 2.8 percent.
Average annualized growth under Biden across all of the last nine quarters has been an anemic 1.9 percent. That is low. But it is astonishingly low in an economy that moved from partially closed to entirely open.
The Parachutes Are Disappearing
At the same time Biden was wrecking the economy, he was also wrecking our available solutions to economic problems. The United States has a consumer economy. It depends on consumer spending to thrive. Because of Biden, consumers do not have money to spend.
Real median household income has dropped under Biden from $76,600 to $74,580, according to the most recent data. For context, under Trump, median household income increased from $70,840 to $76,660, and that includes the worst Covid period. During his so-called “recovery,” Biden took $2,020 out of American paychecks. Americans no longer earn enough to spend our way out of a bad economy.
Before lockdowns, personal savings in the U.S. increased each year under Trump from $746 billion in 2016 to $1.2 trillion in 2019. Personal savings peaked at $2.7 trillion in 2020 during lockdowns. Under Biden, savings have plummeted below pre-lockdown levels to $911 billion as Americans have tried to keep up with inflation. Americans no longer have enough savings to spend our way out of a bad economy.
Under Biden, credit card debt skyrocketed from $717 billion in 2021 to $1.13 trillion in 2023. In December 2023, credit card delinquency rates hit their highest level in over a decade. Under Biden, interest rates on credit cards, auto loans, and home mortgages have hovered at decades-long highs.
This means people are paying more in the future for things that they already purchased in the past, leaving them with less for future consumption. Americans no longer have enough credit to spend our way out of a bad economy.
The savings and debt trends are problematic not only going forward but also looking back. They show that Biden’s growth numbers — as lackluster as they are — were artificially supported by draining savings and racking up debt. Stealing from the future is not a healthy way to maintain short-term economic “growth.”
Even the left’s preferred, albeit usually wrongheaded and always misapplied, Keynesian solution — i.e., government deficit spending — is off the table. Put aside that this is one of the things that put us in this inflationary predicament in the first place. Further, put aside that three additional American generations now know this to be true based on lived experience. The fact is that, in just three years, Biden has incurred more national debt than any other president has incurred in four full years in office.
To compound matters, interest rates on the federal debt — like all other interest rates — have skyrocketed with Bidenflation. This year, simply paying interest on the debt will surpass national defense as the government’s third-largest spending program. The government can no longer spend our way out of a bad economy even in a Keynesian fantasyland.
The next president will be flying east to west into severe Bidenomics headwinds.
