President Biden’s economic legacy

On January 20, US President Joe Biden will leave the White House. During his term, consumption in the US was vibrant, the economy grew steadily and did not fall into recession as predicted. Economists say these things are even more impressive because at the time he took over, the US economy was struggling because of the pandemic.

However, during Mr. Biden’s term, the world’s largest economy also faces public debt, increased trade deficit and higher health care, education and child care costs. Most analysts agree that Biden did not cause inflation, but soaring prices remained a shadow throughout his term.

The economic cycle does not begin and end with the President’s term. The figures can also be influenced by many objective factors, such as war, weather or pandemics. According to analysts, below are the legacies Mr. Biden leaves behind for the US economy.

Job

The job market under Biden is considered very impressive. As of December 2024, the US economy has created more jobs for 48 consecutive months. This is the second longest streak in the country’s history, according to the US Bureau of Labor Statistics. Mr. Biden is also the first President to record a monthly increase in jobs during his term. The US economy has created an additional 16.6 million jobs since February 2021.

Unemployment

As employment increased, the unemployment rate also hit a 54-year low, at 3.4% in January 2023. When Mr. Biden first took office, this number was 6.8%.

During his term, the unemployment rate in the US remained below 4% for 27 months. This is the first time this has happened since the 1960s. Currently the US unemployment rate is 4.2%.

“When unemployment is low, the beneficiaries are groups at the bottom of the labor market, like people of color or people with disabilities,” said Dean Baker – economist at the Center for Economic Research. and the policy stated above CNN. The income and employment gap between white and black workers is also at a record low.

GDP and consumption

US GDP in the third quarter of 2024 increased by 3.1%, continuing to maintain a stable increase. Consumption is the mainstay of the world’s largest economy, despite high inflation and interest rates. A solid labor market, good wage growth and savings from the pandemic have given them confidence to spend.

Household debt increased, but people’s income also adjusted. Wages in the US have grown faster than inflation for 19 months, but are still lower than in the pre-pandemic period.

However, the number of credit card and auto loan defaults last year increased, showing that Americans are facing financial difficulties.

Infrastructure, clean energy and manufacturing

Another legacy of the US President is a series of decrees aimed at rebuilding infrastructure, universalizing clean energy and strengthening domestic production, especially the chip industry. These executive orders are designed to reshape America’s economic backbone for the next decade.

Prominent executive orders are the $1,900 billion economic support package during the pandemic, the $1,200 billion Infrastructure Act, the $200 billion CHIPS and Science Act, and the $750 billion Inflation Reduction Act. In total, the US government has injected more than 4,000 billion USD to stimulate investment, spending and tax support.

US stock market

Under Mr. Biden, the S&P 500 index increased 63.7%. During the last two years of his term, this index increased by more than 20% each year.

DJIA also increased. After losing 8.7% in 2022, the index increases nearly 14% in 2023 and nearly 13% in 2024, reaching a new peak last month.

The US stock market is considered a barometer for the health of the economy. Wall Street’s performance can partly reflect the success or failure of the President’s term. Historically, Wall Street usually performs well during the term of a Democratic President.

Living expenses

In June 2022, the US consumer price index (CPI) increased by 9.1% over the same period last year, the highest since the 1980s. Prices of food, gasoline, cars, and airline tickets all increased. , squeezing the pockets of low-income families. The US Federal Reserve (Fed) therefore raised interest rates 11 times in a row to control inflation. Currently, this country’s CPI has nearly returned to the Fed’s 2% target.

Economists agree that America’s response during the pandemic has helped the country avoid a recession. However, this policy causes inflation – a persistent challenge for the Biden administration.

“We don’t blame the Governor of Florida for the wildfires. That’s silly. The same is true of President Biden,” Baker said. He said that high inflation due to the pandemic is not just America’s problem and it is unfair to blame all of it on Mr. Biden.

However, the huge fiscal stimulus packages passed by Mr. Trump and Biden have partly pushed up demand, thereby making it difficult for inflation to cool down. Prices for popular goods and services are now 20% higher than in February 2021.

Housing

High interest rates affect every aspect of the US economy, but the hardest is real estate. House prices have been a headache since before Mr. Biden’s term and have worsened over the past 4 years, due to the pandemic, inflation and interest rates.

By the end of the third quarter of 2024, the average real estate price in the US was 420,400 USD, 18% higher than the beginning of 2021. During Mr. Trump’s first term, prices increased only 5%.

The average 30-year home loan interest rate in the US is 7.04% per year. This number is forecast to remain above 6% in the next two years.

The housing supply here is also in short supply. Financial services firm Freddie Mac estimates that the US currently lacks 3.7 million homes. Last week, the country’s government announced increased spending on home construction, as well as protection for renters.