Joe Biden promised a “recovery for everybody” as he prepared to take over an economy ravaged by the pandemic four years ago. Few predicted what would follow.
One of two candidates – Kamala Harris, his vice-president, and Donald Trump, his predecessor – will succeed Biden in January. As millions prepare to elect the next US president, here is how the world’s largest economy fared under Biden.
Inflation
The shock waves unleashed by Covid-19 were still rippling across the world when Biden took office in January 2021. In the US, and many other economies, they set the stage for an extraordinary rise in inflation.
For months, the White House and Federal Reserve insisted the factors driving this surging price growth were “transitory”. By the time the consumer price index peaked, reaching its highest level in a generation in June 2022, officials had changed their minds.
The Fed embarked upon an aggressive campaign to tackle inflation in March 2022. Interest rates – cut to close to zero at the outset of the pandemic – were increased at 11 meetings, to a two-decade high.
Suddenly the central fear looming over the US economy was not runaway inflation, but the specter of recession. As the Fed scrambled to cool activity in an attempt to tackle prices, warnings of a prolonged downturn cast a shadow.
Jobs
Such effects failed to materialize. The US economy remained remarkably resilient.
Millions of jobs were created in the labor market. Non-farm payrolls, the key monthly measure used to take the temperature of the US economy, held firm. Unemployment slipped to lows not seen in half a century.
About 399,000 jobs were added each month in 2022, on average – followed by about 225,000 each month in 2023. While growth has trended lower over the past year, and essentially flatlined in October amid disruptions wreaked by strikes and storms, hiring in September proved unexpectedly strong.
The robust data sparked hope that policymakers would successfully guide the US economy to a so-called “soft landing”, with price growth normalized and recession avoided.
The Fed started to cut rates in September. When officials at the central bank make their next decision on Thursday, two days after the election, they are widely expected to cut rates further.
Food prices
While the US economy has remained remarkably resilient, many Americans have not been feeling it. The vibes have been off.
Earlier this year, a clear majority of Americans wrongly believed the US was in an economic recession, according to a Harris poll conducted exclusively for the Guardian. This gloom had only shifted slightly by the time pollsters reran the survey in September.
Positive economic data releases – softening inflation, healthy recruitment levels, steady growth – are unlikely to move the needle when your bank balance continues to dwindle. The cumulative effect of years of inflation are still taking a toll.
Falling inflation does not mean falling prices. The grocery store bills which rose so rapidly in 2021 and 2022 have not crashed back down to earth. For many Americans, the cost of living is much higher today than it was four years ago.
Stock markets
For Biden’s predecessor, and potential successor, no barometer of US economic success was greater than Wall Street. Reassuring his Twitter (now X) followers that Covid-19 was “very much under control” in the US in February 2020, Trump added: “Stock Market starting to look very good to me!”
It has been looking even better under his successor. The S&P 500 has rallied by more than half since Biden took office at the start of 2021, and all the major stock market indexes have hit new highs under his tenure.
