Biden Must Find a Way to Convince Americans About the Economy

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Donald Trump’s plans for a second term are those of a dictator. This desire was already evident in his attempt to overturn the results of the last presidential election and in his insistence that the Big Lie that won him should become the Big Truth of the Republican Party. In addition, he recently told Time that he would build massive detention camps for undocumented immigrants, deploy the U.S. Army domestically, order U.S. attorneys to prosecute people he doesn’t like, the January 6 insurrectionists to pardon in 2020 and fill his entire government with loyalists. It would also raise doubts about NATO’s security guarantees, opening Europe to his friend Vladimir Putin and starting a global trade war.

In summary, Trump’s return to power in the United States, the standard bearer of liberal democracy in the world, may once again be the moment when arbitrary despotism becomes the normal form of human governance. This threat makes the presidential election in six months crucial to the future of not just the United States but the entire world.

These, as Joe Biden has said, have long been at stake for his administration. Yet Americans will not decide the outcome of constitutional issues, no matter how important. Your priority is the economy. In this regard, the news for Biden is grim: 55 percent of voters disapprove of his economic record, according to a poll published last month in the Financial Times. This helps explain why polls remain so close between Biden and Trump.

Such doubts about the government’s economic record are surprising. By comparison, the U.S. economy’s performance was a triumph. According to the IMF, GDP per capita in the US will increase by 8.3 percent between 2019 and 2024 despite the pandemic. This is far better than any other major high-income country. In the UK the comparable figure is Minus 0.2 percent. (See diagrams.)

The arguments for Biden’s defense are laid out in detail in the president’s economic report, released in March. It is good. In the words of a senior official I met in Washington last week: “This is the best example of a supply-side recovery in the US since the 1960s.” The performance in economic growth, jobs and investment has been outstanding. Inflation has also fallen significantly, without triggering the rise in unemployment that some had warned might be necessary.

The unemployment rate was 3.8 percent in the first quarter of this year, down from 6.2 percent three years earlier. During the same period, real private consumption rose by 9.8 percent and real private non-residential fixed investment rose by 14 percent. Real investments in production structures even increased by an astonishing 101 percent between the first quarters of 2022 and 2024. The employment rate for 25 to 54 year olds was 83.5 percent in April, a level that has not been exceeded since 2002. Private Housing Construction The number of units under construction is almost 1.7 million units, a level unmatched in the last half century.

This is an economic boom. It is also one of the most important experiments to assess the impact of a hot economy on labor markets. A key finding of the report is that racial disparities in unemployment and employment have declined sharply, and opportunities for people with disabilities have also improved significantly.

Behind this achievement is a wave of high-profile legislation, including the American Rescue Plan, the Inflation Reduction Act and the Chips and Science Act. A surprisingly common view is that Biden is almost senile. In fact, this was the most hyperactive government since the 1960s. Biden’s energy was amazing.

Why are so many voters so skeptical about this seemingly impressive record? One reason for this is undoubtedly that there are many passionate opponents of the “big government” that Biden has brought to the US. But if libertarians were a truly powerful force today, Trump wouldn’t be leading the Republicans.

A more important reason is inflation. People hate it. Furthermore, after a period of high inflation, it is not enough to bring inflation down again, at least not for quite a while. The price level has risen by almost 20 percent since Biden’s election. People recognized that. Interestingly, those who notice big jumps in food seem to extrapolate this to inflation more broadly. It will take a while to forget what things cost before the recent jumps.

A related problem is the freezing of the housing market. Who wants to sell a house when they have to replace a cheap fixed-rate mortgage with a much more expensive one when buying a new house? This problem will persist as long as interest rates remain well above their current levels.

More important is the fact that perceptions of the economy are political, as Republicans see a bad economy when their opponents are in power and vice versa. Nowadays, people don’t just have their own opinions; they have their own facts. The economy they see is not the economy they experience every day. This is undoubtedly due in part to today’s shockingly irresponsible media landscape, which has made lying, and not least Trump himself, normal.

Robert Reich, a former U.S. labor secretary, adds that many ordinary people simply don’t like the economy they live in, even if it is better than it was a few years ago. They also believe that Trump is at least fighting for them. Such rhetorical style is more important than economic reality.

Whatever the reasons, there are only six months left to change people’s minds. Additionally, the economic news could get worse, especially if high interest rates finally lead to a sharp slowdown or even rise.

The election seems as close as its outcome is crucial. Only the Americans will deny it. We viewers can only hope for a happy outcome.

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