The presidential election is less than a year away, and economic issues are once again top of mind for voters around the country.
Economy
The Trump vs. Biden economy: 12 charts comparing the nation’s economic growth
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Despite the economy’s rapid recovery from the pandemic, President Biden has struggled to convince Americans that his policies are improving their finances. In polls, the majority of Americans still say they trust former president Donald Trump’s handling of the economy over Biden’s.
Both presidents’ economic records have been defined by the pandemic and its aftershocks. The covid crisis upended the job market, stoked decades-high inflation and added trillions to the federal debt.
The economy today is vastly different than it was in 2017, when Trump took office. But the data shows just how each administration has left its mark: Biden, by adding 14 million jobs in less than three years, bringing the Black unemployment rate to a record low and reducing student loan debt by billions. Trump, meanwhile, presided over a period of low inflation, low interest rates and low gas prices.
Here are 12 charts showing the state of the economy now vs. under Trump.
The astoundingly strong labor market is arguably the White House’s biggest victory. In some ways, the bump was inevitable — Biden took office at a time when millions were still out of work because of the pandemic. Even so, the rapid job gains in recent years have blown past economists’ expectations and have fueled the economy’s blockbuster growth.
Even more remarkable is that the labor market has remained strong, despite the Federal Reserve’s aggressive efforts to slow the economy. As long as Americans are employed, they’ve been able to withstand inflation and keep spending, allowing the economy to grow.
Employers have created 14 million jobs during the Biden administration, with a monthly average of more than 400,000 positions. Recently, though, the pace of job creation has slowed, with 199,000 new jobs in November.
By contrast, the economy added an average 176,000 jobs a month during Trump’s first three years, before coronavirus-related closures and layoffs resulted in the sudden loss of more than 20 million jobs.
Aside from a covid-fueled surge in much of 2020 and 2021, the national unemployment rate has remained low through both Trump’s and Biden’s presidencies.
Joblessness fell during the Trump years to a half-century low of 3.5 percent in early 2020, just before the pandemic. During Biden’s presidency, the unemployment rate has inched down even further, to 3.4 percent earlier this year. It now stands at 3.7 percent.
The years-long pickup in hiring has been particularly good for workers who are typically underrepresented in the labor force. Unemployment rates for Hispanic workers, Black women and people with disabilities have all hit record lows under Biden’s watch.
The Black unemployment rate, which Trump liked to take credit for improving during his presidency, fell during both administrations, but reached an all-time low during the Biden era earlier this year.
For the most part, the U.S. economy has expanded at a steady pace under both Trump and Biden. Gross domestic product, a measure of all of the goods and services produced in the country, has grown about 22 percent since Biden took office. That’s compared with a 14 percent uptick during Trump’s presidency, when the pandemic forced the economy into a steep and sudden recession. Even so, the economy rebounded quickly — thanks in part to trillions in stimulus money — and was growing again by the time Trump left office.
Now, under Biden, the economy has notched five straight quarters of growth following a six-month slump last year. The latest expansion has been powered by heavy consumer spending, which makes up about 70 percent of the economy, and new infrastructure and green-energy projects spearheaded by the Biden administration. But economists note that the current rate of economic growth — an annualized rate of 5.2 percent, as of September — is unsustainable, and many expect growth to cool next year.
Presidents have very little control over gas prices. But this is one area where the Trump era was better for Americans — and could help explain some of the gloom Americans are feeling now.
Pandemic-related hiccups, the war in Ukraine and spikes in demand have all sent gas prices on a dizzying roller-coaster ride since 2020. Gas prices more than doubled between April 2020 and April 2022, from $1.84 a gallon to $4.11. They peaked at an all-time high of nearly $5 a gallon in June 2022 but have come down since. Analysts say prices gas prices could fall below $3 per gallon by the end of the year, thanks to a combination of increased production and slowing demand.
Gas prices have a direct effect on how Americans view the economy, and higher prices at the pump have translated to lingering pessimism for much of Biden’s presidency.
Homeownership is one of the biggest ways Americans create wealth, and the recent run-up in prices has been a double-edged sword: Many first-time home buyers been shut out of the market, but people who already own homes have benefited from soaring property values.
On the whole, though, homeownership has become far less accessible during the Biden administration. Home prices have surged during the pandemic, rising an eye-popping 49 percent between spring 2020 and fall 2022. Those higher costs have driven housing affordability to all-time lows, according to Goldman Sachs. Homes are currently selling for a median price of $431,000 — less than the $480,000 they were commanding last year, but still well over pre-pandemic norms.
Mortgage rates have more than doubled in the past two years — from about 3.1 percent to about 7 percent — making it that much pricier to purchase a home and putting a chill on the market. Prices, though, remain high because demand for homes continues to outpace supply.
Inflation has been a persistent challenge for the Biden administration. A rapid run-up in prices after the pandemic resulted in the highest inflation in more than 40 years. Americans have been pinched by higher costs for just about everything, including groceries, gas, cars and health care.
Although inflation has recently come down from last summer’s peaks, prices are still about 3 percent higher than they were a year ago. Many Americans say higher costs have tainted their views of the economy, with voters consistently citing inflation as their top economic concern.
The president has very little power over interest rates. While the Federal Reserve’s chair and governors are appointed by the president and confirmed by Congress, the central bank operates independently.
But the Fed’s actions have a far-reaching impact on the economy. During Biden’s presidency, the central bank has raised interest rates 11 times as part of its effort to rein in inflation. The bank controls the federal funds target range — the interest rate banks use to lend money to each other overnight — which, at 5.25 to 5.5 percent, is at its highest level in 22 years.
Each time the Fed raises that rate, or even hints that it might, there are ripple effects across the economy, resulting in higher borrowing costs for loans of all types, including mortgages (currently at about 7 percent), personal loans (12 percent, according to Bankrate) and credit cards (above 20 percent).
Americans have less spending power than they did at the beginning of Biden’s term. A drop-off in stimulus money, plus rising prices, have caused large swings in household income since 2020. Still, many Americans are ending 2023 better off than they were a year ago, as wage gains outpace inflation.
During the Trump years, by comparison, Americans saw a steady increase in spending power until the start of the pandemic. Overall, real disposable income, or what Americans are left with after taxes and inflation, rose about 10 percent between January 2017 and January 2020.
The stock market rose rapidly during Trump’s presidency and has continued its ascent under Biden. After a period of slowing last year — in anticipation of higher borrowing costs and increased volatility — stock prices have picked back up on optimism that the Fed is done raising interest rates. The Dow Jones Industrial Average and the Nasdaq hit all-time highs this month, and the Standard & Poor’s 500 is on track to follow suit.
Trump kept a close eye on the stock market’s path during his presidency, often taking to social media to flaunt his successes. He also warned Americans that a Biden presidency would result in a “stock market collapse the likes of which you’ve never had.”
That has not happened — which the president was quick to note. “Good one, Donald,” Biden recently fired back on X.
Outstanding student loan balances have been climbing for nearly two decades — until now.
Biden took office vowing to whittle down the debt burden on student and graduates. And while his most ambitious plans, including a $400 billion forgiveness plan, have been blocked by Republican lawmakers and the Supreme Court, his administration has found ways to offer relief.
To date, the White House has canceled some $132 billion in student loan debt for more than 3.6 million Americans. It has also increased federal Pell Grants to low- and middle-income students, allowing them to take on less debt. As a result, outstanding student loan balances have been falling for six months. Americans owed $1.74 trillion in student loans in October, down from a record $1.77 trillion at the beginning of the year.
Despite the economy’s strength, Americans appear downright despondent when it comes to their finances during Biden’s tenure. Consumer sentiment dropped to its lowest level, ever, in June 2022, when gas prices were at a record high. Since then, sentiment has rebounded somewhat but remains lower than it was when Trump was president.
But although they say they feel crummy about the economy, Americans are continuing to spend heavily. That spending — on a range of goods and services, including cars, travel and dining out, has helped power the economy and keep it growing.
The federal deficit peaked under Trump, though both he and Biden have added trillions to the national debt. The national deficit — or the gap between what the government brings in and what it spends — grew every year of Trump’s presidency. Sweeping tax cuts, followed by the government response to the pandemic, added an unprecedented $7.8 trillion to the country’s debt.
Since then, the deficit narrowed in the first two years of Biden’s presidency. But this year it grew again, by 23 percent, leaving the country with a $1.7 trillion shortfall.
That growing deficit, combined with political dysfunction in Congress, is setting off alarm bells for ratings agencies that track the United States’ financial standing. Fitch Ratings stripped the United States of its top AAA score in August. In November, Moody’s downgraded its outlook on U.S. sovereign debt, warning that “continued political polarization” threatens the country’s fiscal strength.
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Economy
Norway’s Economy Ekes Out a Gain for Third Straight Quarter
(Bloomberg) — The Norwegian economy recorded a third consecutive quarter of expansion, as a recovery in purchasing power bolstered car purchases and a weak krone underpinned exports.
Mainland gross domestic product, which excludes offshore energy industry and shipping, grew by 0.1% in the second quarter from the previous three months, according to a release from Statistics Norway published Thursday. First-quarter growth was revised lower to 0.1%.
Thursday’s reading was just below the 0.2% growth estimated by both the central bank and economists in a Bloomberg survey.
The outcome shows the energy-rich Nordic nation is dented more than previously assumed by the fallout from interest rates at a 15-year high, even as the slowing inflation and wage growth above 5% fuel consumption.
The weaker-than-forecast figures, together with revision of earlier data, may still increase the odds of Norges Bank reducing borrowing costs before next year. The Norwegian policymakers have kept delaying monetary easing as one of the most aggressively hawkish in the rich world, forecasting no change “for some time ahead” at their meeting last week.
“Negative revisions clearly leave a picture of a weaker mainland economy than Norges Bank projected back in June,” said Kristoffer Kjaer Lomholt, head of FX and corporate research at Danske Bank A/S. “All in all, a report that should keep the door open for a December cut.”
Household consumption grew by 1.6% on quarter due to a “strong upswing” in car purchases, the statistics office said, while noting the figures for the sector can fluctuate “widely.” Trade and power supply also helped boost mainland growth, it said.
The krone is hovering near four-year lows, helping demand for Norwegian exports, as well as its tourism sector. It was little changed following the report, trading 0.1% lower at 11.7233 versus the euro at 8:50 a.m. in Oslo.
Total exports grew 5.6% on quarter, the fastest increase in almost two years, as oil and gas shipments were less affected by maintenance works that are usual for the season.
The country’s largest lender, DNB Bank ASA, on Wednesday kept its forecast for full-year growth of 0.8% in 2024 and projected next year’s growth at 1.6%, largely due to higher purchasing power of consumers. That compares with Norges Bank’s estimates of expansion of 0.8% and 1.3%, respectively, published in June.
Analysts at DNB and Svenska Handelsbanken AB said the deviation from the central bank’s estimates was too small to clearly affect policymakers’ rate outlook.
–With assistance from Joel Rinneby.
(Updates with analyst comment, market reaction from fourth paragraph.)
©2024 Bloomberg L.P.
Economy
Gaza war extends toll on Israel’s economy
Last week, Fitch Ratings downgraded Israel’s credit score from A+ to A. Fitch cited the continued war in Gaza and heightened geopolitical risks as key drivers. The agency also kept Israel’s outlook as “negative”, meaning a further downgrade is possible.
After Hamas’s deadly attack on October 7, Israel’s stock market and currency nosedived. Both have since bounced back. But concerns about the country’s economy persist. Earlier this year, Moody’s and S&P also cut their credit ratings for Israel.
So far, Israel’s war on Gaza has killed more than 40,000 Palestinians and decimated the economy in the besieged Palestinian enclave.
There are signs of a blowback in Israel, too, where consumption, trade and investment have all been curtailed.
Separately, Fitch warned that heightened tensions between Israel and Iran could incur “significant additional military spending” for Israel.
The Bank of Israel has estimated that war-related costs for 2023-2025 could amount to $55.6bn. These funds will likely be secured through a combination of higher borrowing and budget cuts.
The upshot is that combat operations are putting a strain on the economy. On Sunday, Israel’s Central Bureau of Statistics estimated that output grew by 2.5 percent (at an annual rate) in the first half of 2024, down from 4.5 percent in the same period last year.
Slowing growth
Before the outbreak of the war, Israel’s economy was forecast to grow by 3.5 percent last year. In the end, output expanded by just 2 percent. An even sharper drop was avoided thanks to the country’s all-important tech sector, which has been largely unaffected by fighting.
Other parts of the economy have taken a significant hit. In the final quarter of last year and in the weeks after the war began, Israel’s gross domestic product (GDP) shrank by 20.7 percent (in annual terms). The slump was driven by a 27 percent drop in private consumption, a drop in exports and a slash in investment by businesses. Household expenditure snapped back at the start of the year, but has since cooled.
Israel also imposed strict controls on the movement of Palestinian workers, forgoing up to 160,000 workers. To tackle those shortages, Israel has been running recruitment drives in India and Sri Lanka with mixed results. But labour markets remain undersupplied, particularly in the construction and agriculture sectors.
According to the business survey company CofaceBDI, roughly 60,000 Israeli companies will close this year due to manpower shortages, logistics disruptions and subdued business sentiment. Investment plans have, in turn, been delayed.
At the same time, tourist arrivals continue to fall short of pre-October levels.
Meanwhile, the war has triggered a steep rise in government spending. According to Elliot Garside, a Middle East analyst at Oxford Economics, there was a 93 percent increase in military expenditure in the last three months of 2023, compared to the same period in 2022.
“In 2024, monthly data suggests military expenditure will be around double the previous year,” Garside said. Much of that increase will be used on reservist wages, artillery, and interceptors for Israel’s Iron Dome defence system.
Garside told Al Jazeera these expenditures “have mostly been financed by issuance of domestic debt”.
Israel has also received some $14.5bn supplemental funding from the United States this year, on top of the $3bn in annual aid that the US provides to the country.
Garside noted, “We are yet to see any major cutbacks to other parts of the budget [like healthcare and education], although it is likely that cuts will be made in the aftermath of the conflict.”
Absent a full-scale regional war, Oxford Economics anticipates that Israel’s economy will slow to 1.5 percent growth this year. Subdued growth and elevated deficits will put further pressure on Israel’s debt profile, which will likely raise borrowing costs and soften investor confidence.
Bruised public finances
Fitch expects Israel to permanently increase military spending by 1.5 percent of GDP compared to prewar levels, with unavoidable consequences for the public deficit. Last week’s rating report noted that “debt [will] remain above 70 percent of GDP in the medium-term”.
What’s more, the rating agency warned that “the conflict in Gaza could last well into 2025 and there are risks of it broadening to other fronts”.
Regional conflict
On Monday, US Secretary of State Antony Blinken said that Netanyahu had accepted a “bridging proposal” designed to reach a ceasefire between Israel and Hamas and diffuse growing tensions with Iran.
The following day, eight Palestinians were killed in an Israeli attack on a crowded market in Deir el-Balah, in central Gaza.
Hamas has yet to agree to the bridging proposal, calling it an attempt by the US to buy time “for Israel to continue its genocide”. Instead, the Palestinian group has urged a return to a previous proposal announced by US President Joe Biden, which has more guarantees that a ceasefire would bring about a permanent end to the war.
Netanyahu has insisted that the war will continue until Hamas is totally destroyed, even if a deal is agreed. Israeli officials, including Defence Minister Yoav Gallant, have rubbished the idea of a total victory against Hamas.
A decades-old shadow war between Israel and Iran surfaced in April, when Tehran launched hundreds of drones and missiles at Israel in response to the killing of two commanders from Iran’s Islamic Revolutionary Guard Corps (IRGC) in Damascus.
Along its Lebanese border, Israel has traded near-daily attacks with Hezbollah since last October. The armed group began firing on Israel as a show of solidarity with Hamas. Both organisations have close ties with Iran.
More recently, the assassinations of Hamas leader Ismail Haniyeh in Tehran and Hezbollah military commander Fuad Shukr in Beirut have sparked fears that the conflict in Gaza could metastasise into a regional conflict.
“The human toll [of a wider war] could be significant. There would also be huge economic costs,” says Omer Moav, an Israeli economics professor at the University of Warwick.
“For Israel, a long war would come with high costs and greater deficits,” he said.
In addition to undermining Israel’s debt profile, Moav said that prolonged fighting would incur “other costs”, like labour shortages and infrastructure damage, as well as the possibility of international sanctions against Israel.
“Israel is currently ignoring the fact that economics may lead to greater [societal] damage than war itself,” said Moav. “The government is not behaving responsibly. Does it want to avoid the costs of war, or does continued conflict serve political interests?”
Economy
DNC speakers claim Biden inherited economy in disarray. Economists say it’s more complicated.
The economy has become a key issue as the 2024 election approaches, with both Democrats and Republicans presenting contrasting views on how the economy has fared under President Joe Biden and former President Donald Trump.
As the 2024 election approaches, the state of the economy has emerged as a pivotal issue, dominating discussions and shaping voter concerns. With both major parties presenting conflicting narratives, the question of whether the U.S. economy has improved under President Joe Biden or was already on the path to recovery under former President Donald Trump is at the forefront of the political debate.
When President Joe Biden assumed office in January 2021, the U.S. was grappling with the aftermath of the COVID-19 pandemic, which had precipitated the most severe economic downturn since the Great Depression. The global pandemic disrupted businesses, shuttered industries, and left millions of Americans unemployed, leading to widespread economic uncertainty.
Democrats, including prominent figures such as Senator Bernie Sanders and former President Barack Obama, have underscored the economic strides made under Biden’s administration. During the Democratic National Convention, Sanders emphasized that when Biden took office, the economy was in a precarious state, reeling from the impact of the pandemic. Obama echoed these sentiments, noting that the economic recovery under Biden has been significant.
The Biden administration’s response to the economic challenges was swift and comprehensive. In March 2021, Biden signed the American Rescue Plan, a $1.9 trillion economic stimulus package aimed at providing direct relief to Americans, supporting businesses, and bolstering the economy. The plan included $1,400 direct payments to individuals, extended unemployment benefits, and an expansion of the child tax credit, measures designed to alleviate the financial strain on millions of households.
In the following year, Biden enacted additional legislation to further stimulate economic growth. The $891 billion Inflation Reduction Act focused on addressing rising prices and fostering long-term economic stability. Additionally, the $280 billion CHIPS and Science Act aimed to strengthen U.S. competitiveness in technology and manufacturing, securing the nation’s position in critical industries.
Under Biden’s leadership, the labor market experienced a rapid recovery. By 2022, the U.S. had regained all the jobs lost during the pandemic, and by January 2023, the unemployment rate had dropped to levels even lower than those seen before the pandemic. This period of job creation has been hailed as one of the administration’s key achievements, contributing to the broader narrative of economic resurgence.
Republicans, however, present a different narrative, asserting that the economic recovery began well before Biden took office. They credit former President Donald Trump with laying the groundwork for the rebound, pointing to the significant economic measures implemented during his administration in response to the pandemic.
The onset of COVID-19 in early 2020 sent shockwaves through the U.S. economy, leading to a sharp decline in economic activity. The unemployment rate soared to nearly 15% in April 2020, the highest level since the Great Depression, and the stock market experienced unprecedented volatility.
In response, Trump signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020, a $2.2 trillion stimulus package that provided direct payments to Americans, expanded unemployment benefits, and offered financial assistance to businesses. This was followed by another $900 billion relief package in December 2020. These measures, Republicans argue, were instrumental in stabilizing the economy and setting the stage for the recovery that followed.
By the end of 2020, key economic indicators showed signs of improvement. The unemployment rate had fallen to 6.7%, and the Dow Jones Industrial Average and the S&P 500 had both reached record highs, signaling renewed investor confidence. Republicans contend that these positive trends demonstrated the effectiveness of Trump’s policies and argue that Biden inherited an economy that was already on the path to recovery.
Economists who have examined the recovery acknowledge that both administrations played roles in the economic rebound, but they caution against oversimplified narratives. The pandemic-induced recession, which lasted only two months, was the shortest in U.S. history, but its effects were profound and long-lasting. While the economy had indeed begun to recover under Trump, significant challenges remained when Biden took office, particularly in the labor market and global supply chains.
“The economy at the end of 2020 had recovered substantially, but there were still millions of job losses that the economy hadn’t recovered from,” said Dennis Hoffman, an economist at Arizona State University. He noted that while the initial recovery was swift, the economy remained vulnerable and in need of continued support.
Jesse Rothstein, a professor of public policy and economics at the University of California, Berkeley, described the economic situation at the outset of Biden’s presidency as an “economic crisis,” despite the progress made in the latter half of 2020. Rothstein emphasized that the recovery was far from complete and required additional government intervention to sustain momentum.
The debate over the impact of Biden’s stimulus measures, particularly the American Rescue Plan, on inflation adds another layer of complexity to the economic narrative. While some economists, like Jason Furman, a Harvard University professor and former economic adviser to President Obama, argue that the plan contributed to rising inflation, others attribute the inflationary pressures to global supply chain disruptions and other factors related to the pandemic.
Matias Vernengo, a professor of economics at Bucknell University, dismissed the notion that the stimulus spending was the primary driver of inflation. Instead, he pointed to the imbalance of supply and demand in the post-pandemic economy as the main cause of rising prices. Vernengo also noted that inflation has since moderated, suggesting that it was a temporary shock rather than a lasting problem.
As the 2024 election looms, voters are confronted with divergent economic narratives from both parties. Democrats highlight the progress made under Biden, emphasizing job creation, economic growth, and legislative achievements. Republicans, meanwhile, focus on the recovery that began under Trump, arguing that the economy was already on an upward trajectory before Biden took office.
However, the reality of the U.S. economic recovery is more nuanced. Both administrations implemented critical measures that contributed to the rebound, and both faced significant challenges. While the economy has made substantial progress since the depths of the pandemic-induced recession, the journey to full recovery has been complex, with successes and setbacks along the way.
As voters assess the competing claims, they are tasked with considering the broader context of the recovery, recognizing that the story of the U.S. economy in the years following the pandemic is one of shared responsibility, evolving challenges, and ongoing efforts to build a resilient and inclusive economic future.
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