Proving the experts wrong, the Biden economy is booming while reducing inequality

President Joe Biden has been having some fun with the economists whose predictions about the economy were so wrong. He jabbed back: “Experts, from the time I got elected, were insisting that a recession was just around the corner. Every month, there was going to be a recession.” Instead, economic growth has been robust.  

When 2023 began, just about everybody who had an opinion was predicting the U.S. would be in a recession by year’s end. It hasn’t happened. Not only that, but the U.S. economy is growing (as measured by gross domestic product, an admittedly incomplete measure of our economy but one that does allow for comparisons over time) like gangbusters. As Harvard economist and former Obama economic adviser Jason Furman—who ran with the crowd of pessimists—admitted, “Economists can learn a huge, healthy dose of humility.”

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And it’s not like we are just riding the wave of a global economic boom. America’s growth is much stronger than that of other wealthy countries—most of whom are barely growing at all. In fact, perennial powerhouse Germany’s economy actually shrank last year, even as it and the majority of G7 countries had an equal or higher rate of inflation than ours.

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Economists expected a recession because the Federal Reserve had hiked interest rates to fight the post-COVID inflation we’d been experiencing. Interest rates went up 5 full percentage points in 15 months. Rising interest rates, because they make borrowing more expensive, often lead to a recession, as companies and consumers cut back on spending. This time, however, the Biden economy appears to have avoided that scenario. Instead, we’re experiencing what Paul Krugman called “a better-than-Goldilocks soft landing.”

In fact, as the two charts below make clear, the U.S. economy in 2023 exceeded the expectations of experts by virtually any major measuring stick—not only GDP but also the stock market, job growth, the unemployment rate, inflation, and “real” wages (which means wages after adjusting for inflation, a true measure of the change in people’s purchasing power).

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Inflation has dropped from wicked high back down to under control. It has just about reached the Federal Reserve’s target rate of 2% annual price increases over the past few months, according to multiple measures (a couple of slightly contradictory data points released in mid-February do not reflect a shift in the overall positive trend, and the full monthly personal consumption expenditures numbers released at the end of last month, along with the consumer price index numbers released on March 12, show we remain on the right track, even if progress has slowed a bit in the last few weeks). 

Please note that a small amount of inflation is actually better than no inflation at all. Prices falling across the board generally is a sign of a serious economic crash, as happened in the second quarter of 2020—the height of COVID-19—when prices in the U.S. dropped by 1.7% compared with the year before. That quarter was also the single worst in the history of our economy. Still, it’s not a bad thing that, for example, Thanksgiving dinner cost less in 2023 than it did the prior year.

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The fact that Biden’s economy has seen inflation fall back near the ideal level while maintaining a historically robust job market, including stronger than expected labor force participation—in the most recent month, prime age (25 to 54 years old) workforce participation reached a level not exceeded in 20 years—and wages growing above the rate of inflation is truly impressive. It’s also worth noting that high numbers of immigrants are helping to power that growth. In particular, the Biden presidency has been good for blue-collar workers, with major wins for unions, as per University of Michigan economist Justin Wolfers detailed: 

[He] called 2023 “genuinely a banner year for the working class and low-paid workers,” noting the economic recovery since covid has been strongest for those on the lower end of the income scale. 

“Low unemployment is the most important thing raising the stock of American workers,” he said. “The second most important thing is they’ve managed to negotiate quite substantial real wage gains.”

Not only has wage growth been highest for lower-paid workers, real wages are now higher than they were pre-pandemic across the board. The Center for American progress pointed out that the data shows “every prime-age worker cohort has higher inflation-adjusted median wages than before the pandemic.” The CAP report continued, “real average wage growth for a typical worker during this recovery has been the second highest of all recoveries from post-1980 recessions, and only the COVID-19 recovery has combined impressive wage growth with a near-complete recovery of the unemployment rate.” Oh, and since health care is definitely an economic issue, let’s not forget that Biden—who pushed through increased premium subsidies for middle-class workers—has given us the lowest percentage of Americans without health insurance since, well, ever, at 7.7%.

The Biden economy has thus made historic progress in reducing economic inequality. The aforementioned Krugman cited research that shows that, under Biden, “we’ve reversed almost 40% of the rise in one key measure of inequality that took place during the great income divergence from 1979 to 2019.” Finally and equally importantly, the Biden economy has seen significant reductions in wage and unemployment disparities between Black and white Americans. 

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In late January, Robert Reich, professor, lawyer, and former labor secretary—who has long railed against an economic system that’s “rigged for the rich”—proclaimed: “I’ve never seen anything like this in 50 years of politics. It’s the Joe Biden story that’s not really being told. … What President Biden has done in his first term gives me hope I haven’t felt in years. It’s a complete sea change.”

In this video, Reich laid out how “Biden is fundamentally reshaping our economy to make it better for working people”:

Biden has made explicit his break from the Reagan-Trump Republican economic philosophy that showers more wealth on those who already have it, in hopes that it will magically “trickle down” to the rest of us. As he said last June, “The trickle-down approach failed the middle class.” By contrast, as Biden has repeated many times, he wants to “build an economy from the middle out and bottom up.”

The Biden economy has also seen strong productivity growth. Additionally, we have seen a full-fledged boom in private sector manufacturing, including a huge increase in manufacturing construction spending, which burst through the previous high reached in the final year of the Obama presidency (note that it fell during the years Fuck a l’Orange occupied the White House).

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Manufacturing jobs have also shot up, exceeding anything seen under Trump.

But was the jump in inflation Biden’s fault? Not if you care about facts. The high levels of inflation we saw in the first half of Biden’s term resulted directly from the disruptions caused by COVID-19, as economist and adviser to Democratic administrations Robert J. Shapiro explained

If Trump deserves a pass for most of 2020 because forces beyond his control drove down GDP, jobs, and investment, new research shows that Biden deserves a similar pass for the run-up in prices in 2021 and 2022. That’s because the major forces driving inflation were the pandemic’s impacts on global and national supply chains and OPEC production policies.

The question then becomes how much credit Biden is due for the successes that have occurred under his watch. The answer is: a lot more than he’s been getting. The American Rescue Plan, his 2021 stimulus relief package—which strengthened a weak economy and prevented further suffering while COVID was still raging—along with the bipartisan infrastructure law, the Inflation Reduction Act, and more, helped create these achievements.

Again, the fact that our economy is performing better than the rest of the developed world—which did not enact the kind and degree of stimulus and investment in manufacturing and renewable energy that the U.S. did under Biden—means that he made a real difference.

For an overall, data-heavy comparison of the Biden and Trump economic records, here’s more from Shapiro:

President Biden’s record not only eclipses Donald Trump’s, but when policy made a difference—on growth, employment, investment, and inflation—Biden stepped up and improved our economic conditions. Those are the facts.

Now, it’s definitely true that some Americans aren’t feeling great yet, despite these positive developments—although consumer sentiment has started turning much more positive in recent months. One thing to note is that people continually hearing negative economic news from the media throughout 2023 only reinforced the “vibecession” narrative. But it does appear that the vibe is shifting. 

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Is everything perfect for Americans economically speaking? Of course not. Economic inequality persists, despite the progress cited above, in large part because we need more progressive policies than Democrats could get through Congress with such a slim Senate majority (thank you, Sens. Manchin and Sinema). Also, housing is way too expensive for many people (both in terms of buying as well as renting a home—although rent costs are finally coming down), and too many people are living paycheck to paycheck. 

Biden, Kamala Harris, and Democrats down the line know all of this, which is why they push for policies that aim to create economic growth that benefits everyone, not just people who can afford a membership at Mar-a-Lago. 

When Democrats talk about the positive trends in the economy, they are absolutely not saying that no problems remain, in particular for the most vulnerable among us—people who are disproportionately Americans of color. Democrats talk about those trends because voters judge incumbent candidates like the Biden-Harris ticket at least in part on how the overall economy is doing. Thanks largely to high inflation that bedeviled the economy in the early Biden years, many voters have been expressing negative feelings about the economy—although this is largely driven by Republican voters who say that the economy (or the general direction of our country) sucks even while they are personally doing well. Knowledgeable observers think the worm is going to start turning on the economy and views of Biden.

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The reality is that the Biden-Harris administration is presiding over an exceptionally strong economy—as the president so aptly detailed in the State of the Union address—one that is doing far better than virtually anyone predicted a year ago. If Democrats who talk about that fact get accused of not caring about struggling people, how are they going to convince voters that they can run the economy better than Republicans would? If Team Blue isn’t allowed to tout their successes because they haven’t achieved all their goals, they won’t get the chance to exercise the power necessary to achieve those goals because they’ll lose in November.

The Man Who Lost An Election And Tried To Steal It is out there right now lying about the Biden economy and how it compares with the Trump economic record. Democratic officials and campaigns are out there trying to counter those lies by telling the truth—namely, the Biden economic record, built by progressive policies, is much stronger than Trump’s. For the sake of our country, please take these facts and share them.

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Ian Reifowitz is the author of The Tribalization of Politics: How Rush Limbaugh’s Race-Baiting Rhetoric on the Obama Presidency Paved the Way for Trump (Foreword by Markos Moulitsas)

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