On this Thanksgiving, I remain confused over polls that give President Biden low marks on the economy, where voters say things are bad in a time when most data and outside reality would tell you things are very good. We have unemployment and inflation both below 4% while wage growth is above 4%. We've just seen the largest 3-year growth in US wealth in decades, job growth continues at an impressive level, and the price of gasoline has fallen below under $3 a gallon here in Wisconsin.
Rick Newman recently wrote an article on Yahoo! Finance that tried to explain
why voters favor Trump's economy over Biden's, and brings the data to look into that. Now before I go into Newman's numbers, I will say that I have become deeply skeptical of articles about voters' anti-Biden "feelings", given that Dems have consistently won elections for the last 7 years in this country. And we should remember that 35-40% of Americans will say the economy was better under Trump because they are dishonest MAGAs who are so separated from reality that their opinion should be considered invalid on the subject (and many others).
But 35% is not a majority either, so let's look at the data Newman brings which can explain why those outside of BubbleWorld may think the economy was better 4 years ago. And the immediate stat he points to is wages vs inflation.
The most telling metric we follow is average hourly earnings, adjusted for inflation. This single chart may explain better than any poll why Biden is struggling with voters. (Note: All of these comparisons are through October of each president’s third year in office, so they don’t include the effects of the 2020 COVID pandemic on the Trump economy.)
Real incomes have dropped by about 1% since Biden took office. Under Trump, real incomes were up about 3%. Biden’s underperformance is entirely due to inflation, which on the whole has risen by more than nominal income during his term. Biden’s not the worst on this measure; Jimmy Carter and George H.W. Bush score worse. Both of them, notably, lost reelection bids.
I'd add that inflation is something most people can see in their everyday expenses at the store or when they pay their rent or get gasoline. So they think about it more, and therefore find it to be an annoyance and concern. Even in times of lower job growth and higher unemployment, most Americans don't get/lose jobs over the course of a year, and they tend to credit themselves with getting jobs and promotions over the US economy being "good".
Another thing many Americans hear about and pay attention to on a regular basis is the stock market, and in their presidencies-to-date, Trump was outperforming Biden through October, year 3.
Now since the end of October, the S&P has rallied nearly 9%, so Biden's numbers are likely closer to 120 on that chart today. But that's still below where we were at the end of 2021, and I'd argue that casual voters can more about where you've recently been and may be heading than the overall picture, so they're still grumpy.
But there's an important period of time missing in those chart, and it's from October 2019 to January 2021, where a lot of weird, disruptive crap happened in this country and our economy (we'll get back to this). For example, look at what happened to the stock market between October 2019 and January 2021, as the market crashed with COVID's outbreak in March 2020, and then recovered after a massive infusion of money from a Fed that cut interest rates to 0% and the Trump Administration.
And the drop in the stock market wasn't as severe and long-lasting as the loss of jobs after COVID broke out. Let's not forget that when Biden took over in January 2021, we were down 8.5 million jobs from the levels that we were at in October 2019. We've gained that back and then much more, as nearly 14 million jobs have been added since Biden took office, which makes the job gain of 5.8 million under Trump through October of Year 3 seem very lame.
Let's also note that there was a big jump in real wages in 2020 that happened not from an improved economy, but because there were fewer low-wage service jobs over that time period. It makes the relative stability in wages for 2021 even more remarkable, even as jobs in leisure and hospitality returned (2 million jobs in that sector were recovered in 2021 after losing 3.16 million in the 15 month "gap" that isn't mentioned in Newman's chart).
Now that we're back to a "normal" situation with full employment, take a look at where real wages are now compared to 4 years ago, and they're higher (albeit not by much).
Real average hourly wages, Oct 2019 to Oct 2023 (1982-84 base)
Oct 2019 $10.98
Oct 2023 $11.05
Perhaps this helps explain why too many think the Trump years were better for the economy than the Biden years have been. We have conveniently forgotten the economic wreckage of the COVID era, and all of the job loss that happened, and much of that is likely due to major federal assistance in the form of enhanced unemployment benefits and other stimulus, which meant the stress was short-lived. But many remember the post-COVID inflation that went on for 18 months, as things adjusted to the new normal and the stimulus Bubbles in the economy deflated, still see the higher prices of today, and recall that things used to cost less.
But the fact that we've been able to continue growing and have reached record highs in employment and have been seeing solid real wage growth for the last year and a half is quite an accomplishment. And we are certainly better off than we were 4 years ago.
If the upward trend of 2023 continues for the next 6-10 months, and unemployment and inflation both stay below 4%, there isn't going to be a lot to complain about. And if the Fed would adjust to that reality, and also bring their Fed Funds rate back toward 4% (as they should in that situation), then anything MAGAs are going to say about the "awful" economy in the 2024 campaign will look ridiculous outside of BubbleWorld.
Heck, it's already starting.
Makes you say "What a turkey!", doesn't it? Just like most GOP thoughts on the economy.
Happy Thanksgiving to all 5 of you, and let's smack down their gobbledygook in 2024.
Hilarious being lectured on how good the economy is from a public-sector tax-guzzling douche-nozzle like Jake here. Just keep your gaping pie-hole quiet, while the rest of us do the actual work in this POS economy your senile old pants-crapper has created, K, sport?
ReplyDeleteAwww, look at the soon-to-be-unemployed GOP hack who adds nothing and takes everything for a “career”.
DeleteWhat a tired and lame comment from a mediocrity incapable of answering my points. But it explains a lot, don’t it, folks?
Jake
Thank you for your work on this blog. I too am mystified by all the Biden hating, and wonder how real it truly is. It doesn’t help when the mainstream media treat Trump as a legitimate candidate and right-wing media spew B.S. nonstop.
ReplyDeleteBiden has done a perfectly respectable job as President and the economy is in a good place. The 2024 election should be a snooze-fest, but of course it won’t be. A third of the country is hardcore Trumpers who hate the fact that Biden is even alive, and a third seem to be disappointed that he’s not Bernie Sanders but might just hold their noses and vote for him anyway. So the future of the country will come down to the third of voters who vote purely on their own personal situations, emotions, and gut feelings. Yikes.
Oh, and speaking of right-wing B.S., thank you for dismantling that dopey troll in the comments above. That’s always enjoyable to read!
Minnesconsin Tom