As President Joe Biden navigates the complexities of his term, the economic landscape under his administration presents a nuanced picture of resilience amid challenges. A detailed analysis of the Bidenomics reveals a resilient job market, a significant decrease in inflation, and a robust stock market. However, the specter of high inflation, deteriorating household finances, and potential recession looms large.
Inflation: Dives Down
In June 2023, inflation fell to its lowest annual rate in over two years, with the consumer price index increasing just 3% from a year ago, and 0.2% on a monthly basis. This slowdown in inflation gives the Federal Reserve some leeway as it seeks to reduce inflation that was running at a 9% annual rate in 2022, the highest since November 1981. Despite this, the central bank is expected to continue raising rates due to core inflation still running above the Fed’s 2% annual target.
However, the U.S. consumer price index surged from 1.4% on an annual basis in January 2021 to 5% in March, reflecting an overall increase of 15%. Critics argue that this inflationary pressure has been exacerbated by the administration’s heightened economic stimulus measures to fight the pandemic, leading to a 13% spike in national debt to $31.4 trillion from the end of 2020 through the end of 2022.
Job Market: A Beacon of Resilience
The job market has remained one of the economy’s strongest pillars during Biden’s presidency. The unemployment rate slipped from 6.3% in January 2021 to a 54-year low of 3.4% in January. However, recent widespread layoffs may be starting to have an impact, with the last month marking the worst job growth since 2020 as the unemployment rate clocked in at 3.5%.
Household Finances: A Growing Concern
Despite high employment and solid wages, Americans’ bank accounts are largely in poorer shape now than they were before Biden. Americans saved only 4% of their disposable income in the final quarter of 2022 compared to 14% two years prior, a worrisome development as household debt surged 16% to $16.9 trillion during the period.
Stock Market and GDP Growth: A Mixed Bag
The S&P 500 hit an all-time high during Biden’s first year and is up 9% since he took office. According to the data from Statista, the United States GDP is projected to increase steadily over the next decade from 26.24 trillion U.S. dollars in 2023 to 39.23 trillion U.S. dollars in 2033. The government reported that the economy grew 2 percent in the first quarter, a jump from previous estimates. This revised GDP growth is seen as a tailwind for the economy, reflecting the underlying resilience of the overall economy and the solid foundation of U.S. households.
The Road Ahead
Despite the challenges, some experts believe that with good policymaking and a bit of luck, a recession can be avoided as the fundamentals of the economy remain strong. The Biden administration’s economic performance presents a nuanced picture of resilience amid challenges, a narrative that will undoubtedly continue to evolve as his term progresses. As the Biden administration continues to spotlight government programs and tax credits intended to aid the middle class, the public’s perception of Biden’s stewardship of the economy will be a key factor in the upcoming political discourse.