Biden’s economy has the best growth record since Clinton


More than a year and a half into Joe Biden’s presidency, we now have full numbers for second-quarter economic growth from the U.S. Bureau of Economic Analysis. This seems like as good a time as ever for another article in an unscheduled series comparing growth rates under U.S. presidents — a bit of a surprise, Biden’s highest since Bill Clinton. It shows that we are on pace to compile the growth record of

Yes, this is adjusted for inflation, but the Gross Domestic Product Price Index has not risen as much as the better-known Consumer Price Index (7.6% y/y in Q2 vs. (versus 8.6% of CPI). Yes, to measure growth here, not just GDP, but average GDP and Gross Domestic Income, another indicator tracked by the BEA. Theoretically, GDP and GDI should be equal, but they are estimated from different sources, and so far the US economy has followed a very different trajectory this year. According to the latest BEA estimates, GDP fell by 1.6% annualized in the first quarter and 0.6% annualized in the second quarter, while GDI rose by 1.8% and 1.4%.

Recently, the Biden administration and the media have set goals for how to define a recession beyond two straight quarters of negative GDP growth by looking at other indicators such as wage employment, industrial production and real incomes. There are many complaints that it is changing. continuous growth. In fact, the National Bureau of Economic Research has been the semi-official arbiter of when U.S. recessions begin and end long before there was such a thing as GDP, and economists there more often than not rely on the data. Keeping an eye on the series and becoming less susceptible. Subsequent revisions than quarterly GDP figures.

By using the average of GDP and GDI to measure economic growth, I’m actually changing my target, but I think it’s justified. Interest in the metric, which BEA began mentioning in his quarterly GDP report in 1998, began to pick up again in the late 2000s. Then Jeremyna Lewake, an economist at the Federal Reserve and now working for Goldman Sachs, argued in his 2006 Working Paper: The GDI “did a better job of recognizing the beginning of the recession” than the GDP. The NBER’s Business Cycle Dating Committee first referenced his GDI in one of his 2008 recession announcements. The economy grew 2% in the first quarter of this year and 1.8% in the second quarter. In 2015 BEA started reporting simple averages of GDP and GDI that I use here. This currently represents growth of 0.1% in Q1 and 0.4% in Q2.

The first GDI estimate for each quarter is released one month later than the first GDP estimate. Unless that changes, it’s hard to imagine a public discussion of GDI or GDP/GDI averages replacing GDP. But economists and economic journalists, myself included, have paid more and more attention to these measures each quarter. Now this happens to make the economic performance of the Biden administration look better than GDP alone. Whatever it is, it also makes economic growth look better under his predecessor.

Measured by real GDP alone, growth under the Biden administration is 0.6 percentage points slower than the GDP/GDI average and 1.3 percentage points slower than the 4% GDI growth rate. It’s still the best since the Clinton era. Donald Trump has a smaller impact on growth, but he is the last of the presidents listed here. Quarterly GDP data are available only up to his 1947. So while this chart starts with Eisenhower, the annual data show that Herbert had the slowest GDP growth under Trump since his unsuccessful presidency of Hoover.

When I wrote a column to that effect last year, I heard from readers who felt it was unfair to Trump as he faced the historic misfortune of a once-in-a-century pandemic. It is true that the pandemic was ill-fated, and US economic performance in the final years of Trump’s presidency actually stacked well compared to other wealthy nations. Growth was pretty respectable at 2.6% annualized in GDP and 2.5% in average GDP/GDI, but previous presidents also suffered economic recessions without arranging them through no fault of their own. (And I don’t think it’s right to specialize Trump in such comparisons.

Of course, a lot can still happen during Biden’s tenure. At this point in President Trump, GDP/GDI growth was 2.8% annualized for him and 3.1% for GDP growth for him. Then it slowed down even before the pandemic. Whether or not the U.S. economy slips into recession, growth has clearly seen a downshift this year. So far in the 21st century, her GDP/GDI in the United States is growing at an annual rate of 2% and GDP at his 1.9%. I think the longer Biden stays in office, the closer the growth rate will get to those numbers.

Also, economic growth during a president’s tenure is a flawed measure of economic impact. The already discussed role of luck, built-in limits on GDP, and similar measures that reflect how economic rewards are distributed and whether they are sustainable, and how policy choices under a president There is a simple fact that can greatly affect later growth. leave the White House. We can’t reconcile all of these, but at least we can use several different ways of measuring growth to make it clear that no single number is correct. Average GDP and GDI Comparing values ​​to GDP is one approach. Another is to time-shift and start measuring in the quarter before or after the president takes office.

For a president who has served two full terms, these shifts don’t change things much. For someone with a very short tenure, like Gerald Ford or Biden to date, the difference in growth rates can be significant.

Population growth is a key factor influencing economic growth, not outside the president’s control, but appears to be largely determined by other factors. If you look at per capita economic growth and adjust for that, things change even more.

This seems pretty unfair to Dwight Eisenhower. Most of the rapid population growth during Eisenhower’s presidency consisted of babies who were not yet in a position to contribute significantly to the economy. But it casts the economic performance of more recent presidents in a justifiably favorable light. You know, by this measure, growth under Biden is the fastest since Lyndon Johnson took office.

Again, I don’t make it very often! But it’s so different from the current public perception of the economy that it’s worth pausing to understand why.

So far, consumer prices have risen faster under a Biden administration than any president since Jimmy Carter. People really hate inflation. Until it slows down, Biden won’t get much credit for the pace of economic growth, and slowing it down may require slowing that pace even further.

Life in America is good, even by European standards: Tyler Cowen

This economy is proving too difficult for economists: Jared Dillian

Stop Chopping Words While the Economy Goes South: Daniel Moss

This column does not necessarily reflect the opinions of the editorial board or Bloomberg LP and its owners.

Justin Fox is a Bloomberg Opinion columnist covering business. He is the former editorial director of Harvard Business Review and has written for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market”.

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