History will be kinder to Joe Biden than the pollsters

Now that pollsters are declaring President Joe Biden a “failure,” historians will reckon with too many economic signals rendering the prevailing narrative little more than media noise.

From the American Rescue Plan Act of 2021 that ushered in the longest period of unemployment below 4% since the 1960s to the Infrastructure Investment and Jobs Act of 2021 that paved the way for road and bridge building, and from the Chips and Science Act of 2022 that sparked the biggest manufacturing construction boom the country has ever seen to 2022’s Inflation Reduction Act that has led to many tens of billions of investment in new technologies that are already leading to new sources of climate-friendly energy, history will show that the 46th president laid the groundwork for U.S. exceptionalism lasting many years, perhaps even decades, after his administration has long ended.

This is why the U.S. economy is growing faster than any developed country as measured by the International Monetary Fund. It’s why America has been able to avoid a recession that so many pundits said would be inevitable by now. It’s why the U.S. stock market is the envy of the world, soaring 58% percent under Biden’s watch, compared with just 2.5% for everyone else as measured by the MSCI indexes. Were he still around, economist John Maynard Keynes would surely call the performance of equities a psychological referendum on Biden's policies.

No U.S. president in the last half century comes close to replicating Biden’s superior score among most of the 15 measures of relative prosperity weighted equally, according to data compiled by Bloomberg. The 2.9% annual increase in non-farm payrolls, 7.9% nominal rate of annualized GDP growth, 14.1% increase in homeowners equity, 5.1% surge in average hourly earnings and the dollar’s 19% appreciation against a basket of major currencies are just some of the metrics that make Biden the uncontested economic leader.

What makes this performance all the more remarkable is that Biden inherited the once-in-a-century COVID-19 pandemic that led to a catastrophic 1.12 million deaths in the U.S. alone from his predecessor, President-elect Donald Trump. Remember that at the time of the 2020 election, a recovery from both the pandemic and the worst recession since the Great Depression presided over by Trump was still in doubt. Biden then delivered what had been largely missing for the previous two decades: fiscal stimulus.

“If you look at the economy” before the pandemic “it was very low growth for 20 years,” JPMorgan Chase & Co. Chairman and Chief Executive Officer Jamie Dimon told the Economic Club of New York in April. “But if you look at the economy since then, it's been booming.” (It was the first time in his career as the CEO of the No. 1 bank that Dimon used the word “booming” to describe the U.S.) “The American consumer, even if we go into a recession, is much wealthier than before,” he added. “Debt service ratios are very low...their home prices are up; their stock prices are up.”

Dimon should know because JPMorgan is one of 16-based U.S. companies that make up the 20 most valuable in the world by stock market value, with most of their superior valuations occurring during the past three years, according to data compiled by Bloomberg. Investors are gladly paying a record 28% average premium to own American stocks, more than twice what they paid under Trump.

Contrary to popular opinion, the Biden economy benefitted a wider swath of Americans. The poverty rate fell to 11.1%, the second lowest in data going back to 1973, according to the U.S. Census Bureau. Also, the Gini Index of Income Inequality declined for two straight years, the first time that has happened since the early 1970s. Under Biden, household net worth has surged by an unprecedented $32.1 trillion through mid-2024. Americans are spending less than 10% of their incomes servicing debt, a record low in data going back to 1980 and excluding the pandemic years of 2020 and 2021 when many payments were put on hold.

The problem for Biden and Vice President Kamala Harris was that all of these accomplishments were overshadowed by the sudden scourge of inflation due mostly, according to researchers at the Federal Reserve Bank of San Francisco and elsewhere, to the pandemic-era disruption to the global supply chain under Trump, and a housing market that effectively “trapped” millions of Americans in place.

Inflation is the more complicated story because although the rate of increase in the cost of goods and services has been tamed, as seen in the collapse in the Consumer Price Index from 9.1% in mid-2022 to the recent 2.7%, which is where it was under Trump, overall prices are higher. While wages have been rising faster than inflation since mid-2023, helping to explain why consumer spending has exceeded forecasts, it’s clear that the two years prior when earnings growth lagged behind inflation still weighs on the minds of voters. Never mind that inflation rates in the U.S. have come down much faster and farther than just about anywhere else in the developed world.

It’s also clear that Americans feel like the housing market is somehow “broken” despite the rising home prices referenced by Dimon and big gains in homeowners equity. The problem here is that in order to help get inflation under control, the Federal Reserve raised its benchmark interest rate from near zero in early 2022 to as high as 5.5% last year. This led to a rise in 30-year mortgages from 3.25% to more than 7%. Existing home sales fell to levels last seen during the financial crisis as housing affordability measured by the National Association of Realtors collapsed. In effect, those who want to buy a home largely can’t and those who already own a home don’t want to sell and give up their low mortgage rates.

There is light at the end of the housing tunnel. With inflation subsiding, the Fed has started to lower its target for the federal funds rate, and the cost of financing a home is starting to drop as well. A Mortgage Bankers Association index tracking loan applications to purchase a home just posted its biggest two-week increase since January 2023.

Unfortunately for Biden and Harris, little of this context was shared with readers, listeners or viewers by corporate or social media. On the contrary, many disingenuous media overwhelmed the favorable outlook with misinformation that continues unabated from domestic and foreign perpetrators. It may not have mattered anyway. In many ways, Biden and Harris are victims of circumstances. Incumbents around the world are being ousted in elections by voters still scarred by the pandemic and looking to assign blame.

Like Biden, Harry Truman and Lyndon Johnson were former vice presidents who also shared much greater disapproval than approval from voters during their waning days in the White House. Only much later did Truman and Johnson garner a much greater appreciation for their handling of the economy. It’s likely to be the same with Biden.

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—With assistance from Shin Pei.

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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Matthew A. Winkler, editor in chief emeritus of Bloomberg News, writes about markets.