Based on Incomes, Americans Are a Lot Better Off Under Biden Than Under Trump | Washington Monthly
Category: News & Politics
Via: jbb • 5 months ago • 63 commentsBy: Robert J. Shapiro (Washington Monthly)
S E E D E D C O N T E N T
In their only 1980 presidential debate, Ronald Reagan posed a famous question that sealed Jimmy Carter's political fate: "Are you better off now than you were four years ago?" Bill Clinton similarly denied George H. W. Bush a second term in 1992 by running a campaign based on James Carville's famous expression, "It's the economy, stupid." Donald Trump faces a real challenge coming up with a similarly plausible line in his contest with Joe Biden. Last year, the Democratic president presided over the largest income gains in the 21st century.
I recently showed in the Washington Monthly how Biden easily eclipses Trump in categories such as how much the economy has grown, how much businesses have invested, how much consumers spent after inflation, how many jobs businesses created, and how many new enterprises entrepreneurs started. In every case, Biden's superior record stands—even if Trump gets a pass for 2020 when the COVID-19 pandemic ravaged the global economy.
However, most voters judge a president's economic performance by other metrics, namely how much money they've earned and how much they can afford to buy with it. Biden easily beats Trump by these metrics as well, too. Focusing on wages and salaries, for example, working Americans earned an average of $3,250 more per year from 2021 to 2023 than from 2017 to 2019, and that's taking inflation into account.
When voters judge a president on the economy, timing also matters. The severe inflation of Carter's sole term eroded people's buying power just as he prepared to campaign for reelection. People forgot that their real incomes per person had jumped 6 percent in 1977 and 1978—until OPEC hiked energy prices, Iran's revolution cut its oil production, the U.S. stopped importing oil from the country, and the ensuing inflation turned people's gains into losses. Ironically, Americans were better off in 1980 than four years earlier, but their gains were fading.
Biden's timing is proving luckier than Carter's. Adjusted for inflation, per capita incomes increased 3.1 percent in 2021 but fell as inflation overwhelmed increases in people's wages and salaries in 2022—and then, as inflation receded and employment soared in 2023, real incomes jumped 4.2 percent. Donald Trump, Barack Obama, and George W. Bush never came close to the strong income growth of the last year. To put it in perspective, Americans experienced larger annual income gains only five times in the previous 50 years, including twice under Ronald Reagan, twice under Bill Clinton, and once, very briefly under Trump as his term ended.
In 2020, the mogul's last year in office, real per capita disposable income jumped 6.4 percent, albeit as growth, jobs, and investment collapsed. That disposable income-growth number is almost certainly why many Americans have rosy memories of the Trump economy. But the economy had nothing to do with the gains in 2020: All of the income growth came from special government transfers for the pandemic, through large checks for 90 percent of households and souped-up unemployment benefits for 30 million Americans who lost jobs.
Before the pandemic, "other" federal transfer payments and jobless support averaged $470 billion per year from 2010 to 2019. In 2020, however, those payments jumped to nearly $1.5 trillion, an increase of $990 billion in one year. If we set aside that stunning largesse, what happened to people's incomes in 2020 based on the economy and standard government payments? Instead of per capita incomes rising 6.4 percent after inflation, they edged down from $49,423 to $49,376 (2020 dollars). That should be unsurprising given that total wage-and-salary income was static and GDP fell 2.2 percent, the sharpest drop since the Great Depression of the 1930s, except for the Great Recession of 2009.
The same adjustment also reduces real income gains in 2021, Biden's first year in office, when special government transfers and expanded jobless payments reached more than $1.6 trillion or $1.16 trillion above average levels. But the impact on incomes in 2021 was much less because, unlike in 2020, the economy was strong. In 2021, real GDP grew 5.8 percent, employment increased by 4.1 million jobs, and total wage-and-salary income, after inflation, rose 4.5 percent.
And since we measure how much incomes grow versus the previous year, income gains in 2021 apart from the special pandemic payments should be based on 2020 income also apart from the special payments in that year. I calculated it and found that after adjusting for inflation, American incomes per capita increased by 2.5 percent in 2021, rather than the 3.1 percent rate that includes the special transfer payments and jobless support. In 2021 dollars, real personal income per American increased $1,163 in 2021 from $51,499 to $52,662.
In 2022, real incomes declined 5.9 percent as inflation jumped to 6.1 percent, but that income falloff wasn't because the economy slowed. It's because most of the reported fall in per capita income came from a sudden $900 billion reduction in those pandemic-related special government transfer payments. Adjusted for inflation, the remaining transfer payments in 2022 were less than the pre-pandemic average, and federal jobless support fell to $22.3 billion, the lowest level after inflation in more than 50 years.
At the same time, the economy added 6.3 million new jobs in 2022, increasing wage-and-salary income after inflation by $174 billion. The year's high inflation did outrun the otherwise healthy per capita income gains, but by much less than reported: Focusing on what happened to people's incomes based on the economy, real income per capita declined 1.9 percent, from $55,878 to $54,798 (2022 dollars). Notably, that decline was less than the previous year's gains.
That brings us to 2023, when the official data showed that Americans' per capita incomes, after inflation, jumped 4.2 percent. The special transfer payments continued to fall substantially below those before the pandemic, and federal unemployment payments edged to $22 billion, the lowest level since 1969, adjusted for inflation. With transfer payments and jobless benefits no longer distorting incomes, the official report accurately reflects what happened to Americans' real disposable incomes based on the economy.
It's hard to overstate the extraordinary growth of incomes during the Biden Boom of 2023. No president since Richard Nixon has presided over average annual income gains as significant as the 4.2-percent increase in 2023 under Biden.
Now that the 2024 presidential campaign primaries are well underway, the broader record also shows that Biden clearly beats Trump based on wages and salaries per working American and all income per person, including transfer payments, capital gains, and other financial gains. One reason for this boon is that millions more people are employed under Biden: An annual average of 151.7 million Americans held jobs from 2021 to 2023, versus 147.1 million under Trump from 2017 to 2019.
The other reason is the higher wages and salaries under Biden. If we take wage-and-salary income per year from 2021 to 2023, divided by the average number of people working each year, the result in 2023 dollars is an average annual wage-and-salary income of $76,142 per working person. That's $3,250 more than the average of $72,892 under Trump from 2017 to 2019—again, after inflation.
If the economic issue in the upcoming election is how much Americans earn, it's clear that Americans have been much better off under Biden than they were under Trump.
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Robert J. Shapiro
Follow Robert on Twitter @robshapiro. Robert J. Shapiro, a Washington Monthly contributing writer, is the chairman of Sonecon and a Senior Fellow at the McDonough School of Business at Georgetown University. He previously served as Under Secretary of Commerce for Economic Affairs under Bill Clinton and advised senior members of the Obama administration on economic policy.
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That's a very common fallacy--- but people keep repeating that (The total falsehood that the President--whether Democrat or Republican) controls oil prices.
It’s a hellava lot smaller fallacy than giving Biden credit for the USA having the biggest world economy.
Where’s the comment disputing that?
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If only.
Problem is, I don’t know about you but “somebody” wasn’t there helping me build it. Only fellow employees being paid to do so were.
If only …..
A mini-storage is not US Steel, Burlington Northern or Boeing...
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Correct.
So Biden takes credit for the high inflation; gas prices; supply chain problems; rising unemployment; border crisis; illegal immigration; increase in deaths from Fentanyl; rising crime; the botched Afghanistan withdrawal; getting the US involved in not one; but two proxy wars; and having more deaths under Covid during his watch than Trump- despite having the "vaccines" that Trump rushed through and therapeutics at his disposal?
Common Joe, take credit for your vast failures that have adversely affected far more Americans than your supposed "accomplishments" have helped.
Well, maybe as you say, Biden takes credit for that/
But if he does, he considerably misinformed:
How have crime rates in the U.S. changed over time?
Both the FBI and BJS data show dramatic declines in U.S. violent and property crime rates since the early 1990s, when crime spiked across much of the nation.
Using the FBI data, the violent crime rate fell 49% between 1993 and 2022, with large decreases in the rates of robbery (-74%), aggravated assault (-39%) and murder/nonnegligent manslaughter (-34%).
Thank you Old Man!
Under Biden, the U.S. was the largest economy in the entire world!
(Of course that's not a particularly good argument...)
I think the American people disagree with you.
Nope, they still disagree JBB’s premise. Unless one is nuts I suppose.
Oh yeah. he was just an assistant coach who implies he was the head coach.
good example of his pattern of resume inflation here.
The fact remains that America and Americans are way better off now then four years ago and we lead the world economically post-Covid. The stock market has about doubled since 2020...
And that's great, if you have money in the stock market. Tell that to people who don't have money in the stock market and who's pay raises were overtaken with inflation. Those who continue to struggle with paying the electric bill and any other utilities, those who struggle to make rent because of how much rent has increased by. Why is it you always ignore the poor?
Holy shit!
One wonders if my friends on the left really believe that?
Wow! Just wow!
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I am sorry if you are not thriving like most Americans are...
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Once again, the American people disagree with you. By a large margin.[✘]
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Except the numbers show Americans really are better off today...
This explains why MAGA are losing. Because America is winning!
First, the Economist? Hilarious!
Second, please feel free to explain how that chart shows how Americans feel they are better off. What it shows is a lot of people are useful idiots.
This is better off?
I’d go on but I’ve got people to see and things to do today.
Perseid party at Che Sparteh tonite.[ ✘ ]
For most of the current administration, prices have risen faster than wages, leaving most American workers behind.
MAGA is loosing because of Trump's behavior and the threat of the 25th Amendment got Biden off of the ticket.
Yet, most Americans really do have significantly higher net worths and incomes than they did only four years ago today, in all reality.
If you will read the article you will find that you were dead wrong!
Well, you certainly earned some points. Just not in this debate...
Bush, like Trump, never won a second term. He got whooped!
"Nunt Uh", isn't a rebuttal. Americans are better off than 4 yrs ago!
Polling indicates that the economy remains the number 1 issue. Polling indicates the Trump has a significant lead on this issue. Kamala hasn't said what her economic plans are or how they might differ from Biden's. Responsible or not voters see:
Americans don't agree
Americans are misinformed
Trump's MAGA lies are ineffective as Americans are thriving...
Damn media.
Except, this is not about what people think. This is about the fact that most American's net worths and incomes have soared!
You've got to admit things have gotten a lot better here lately.
Because America leads the world economically post-Covid...
This is not an opinion. This is a fact. The numbers do not lie!
Also, how people felt two or even one year ago is not today...
Today most Americans are better off financially than we were.
Why does it make MAGAs so sad that Americans are winning?
Yes, it has been a long time since a Party won the WH for 4 consecutive terms.
But, the first black (Obama) and first woman (Harris) President is something recent. The gop elected one POTUS in 20 years...
Since 2004 the gop only won once, and he only won one term!
Too bad Americans are not buying the shit Dems are trying to sell.
Damn, what would you expect from people too stupid to believe dem propaganda and believe what they actually see?
Well, there are a whole lot of people who's retirement accounts are based on stocks directly or indirectly.
Why do you think inflation happens?
In the case of rents, let's look at the housing market. People say, "There is a shortage of available housing. That is why the rent is high." For the oblivious, that is good enough. The obvious question to ask for those with slightly more curiosity than say, a rock is, "Why is there a shortage of available housing?" From here we go down the various rabbit holes of increased post-pandemic demand, higher interest rates causing would be buyers to increase the demand and raise the amount that they are willing to pay because they have to live somewhere, an increase of existing houses converted from residential/long-term rental to short-term rentals... the list goes on and on. But you can list all the real reasons, and not once mention a presidential name because the PotUS cannot directly affect market prices.
I didn't mean to pick on you, it was just on my mind because I keep hearing people say they are voting because of some economic item that is outside of control of any one person, especially the president.
I see your point, makes you wonder why the Administration called it Bidenomics.
I expect people to act reasonably and in accordance to how they would like to see others act towards them. My expectations are sometimes too high.
Generally, I don't consider misinformed people to be stupid. I consider them to be...(Awwwwww-wait-for-it...) misinformed.
There are a myriad of things that are more complicated than one thinks at first observation.
So by calling it Bidenomics, the administration was causing, inadvertently or not, misinformation.
Because they pander to the people as every administration does: They tell them what they want to hear.
Right now, Republicans want Trump to tell them that Biden/Harris broke the system and that he can fix it. Hence the over-the -top rhetoric and consistent lying about basically everything. Democrats want to hear, "it'll be ok" and "we're not going back". Looks like a sizable number of independents want that too.
Personally, I think Trump is chaos incarnate and should be kept away from the levers of power.
It would be nice if it were as simple as electing a president to "fix" things.
Agree!
I consistently hear and read how 'bad' the economy is, and has been under Bidens reigns, and yes, everyone can see in real time the inflation impacts, but I do not believe Bidens policies are what increased inflation so much, I see it more as corporate greed and the fact that due to supply and demand, Corporations were able to squeeze more out of consumers, but I am no economist. I did not see this 'horrible' economy and death spiral Trump claims only he can overcome via drill drill drill, ...?
What i do see is a hell of a lot of ignorant people giving and taking blame for that which is not theirs to claim. I see due to politics, distortions of reality that must soon refrain. I see lie after lie, distortion after distortion, negativity and scare tactics out of proportion, and policy of politics running ramped over reality and a Judicial System far past impartiality, thus denying the electorate the proper information required to keep US All from a nation falling out of formation due to a cancerous growth known as Trumpism and a strategy of treatment known as pretend it isn't there by the Dr. GOP who have prescribed what should be a death potion for the Republican party, but so far, tough to see, so i'll be encouraged by a surging more positive outlook and plan, presented by the Dems and believe it can, overcome the devastation by trump on this nation, and before he can accomplish more, cause he truly is the definition of impure.
It seems you are referring to the four men portrayed in comment # 4.1?
Looking at that picture, its quite obvious the guy on the left, the one with the gray shirt, is a total psychopath!
But were they responsible for it? (i.e. did either or both of them make it happen?)
Yes there are. According to this, almost half of Americans do not have a dedicated retirement savings account. That's a large number of people who are expecting Social Security to pay their needs. And reading down in that article, the medium savings by age group is abysmal IMO.
The number of people who say they are living paycheck to paycheck is increasing as well. While this can also be a symptom of poor financial planning, it can also be a symptom of expenses raising faster than income.
Why does inflation happen? Lots of reasons. Controlled inflation is actually a good thing. But the inflation we experienced during this administration can also be impacted by the volume of government spending. Regardless of the sitting president being responsible for it or not, we should know that the voting people will look at kitchen table issues like how inflation impacts their day to day living and if it's bad they will blame the sitting president. Right or wrong doesn't come into play for that. How this will impact November we will have to wait to see, but it cannot be ignored. I'm not about to say that Trump has a plan to fix any of it (despite what he will say) but there are people who will remember what their personal economy was like under Trump as compared to under Biden and their emotions of that will color how they vote. That's human nature.
Well yes and no. IMO Biden was doing what every other president has done, tried to take the credit for something good. Just like presidents tend to blame the previous administration (or other political party) when things go wrong. That's politics.
Well I feel that it should matter. People need to know what the president has not done as well as what they have done, or more importantly, what is possible and what is merely fantastical unicorn farts.
Fuck marketing. Look under the hood. Check stuff out. I have already had a severely disappointing test drive with Trump and I am definitely not buying what he is selling. His disregard and contempt for a major portion of the population just is not who I want representing my values on the world stage. We are all human and should have the shared aspects of that to guide us as a country. Trump dismisses all of that and preaches hate and division, or, as he puts it, "I love all people... Except some, who I hate, or.. maybe... maybe I don't even think about them cause the're not really people... blah blah blah immigrants blah... Stupid! blah blah..."
I don't buy that line, at least not enough to cause the seriously high inflation that we experienced last year. I think that most of that was brought about by the pandemic and the after affects thereof. People were spending more because products were costing more, because they had no choice, but they did have the money. I think that there were some who just raised their prices because everyone else was. They had cover. Certainly not all, but some. The "Economy" is a large and differentially structured system that spans the globe with different norms and rules that were thrown up in the air when the pandemic hit. Takes a while for all that to settle out.
I am an old hippie at heart. The kind that says, "You know, if you spent as much on raising people up as you do on mowing them all down, the world would be a much nicer place."
Peace.
Actually that's not true. Trumps lies are effective.
that why he keeps repeating them.
The false perception our economy is bad is already changing. Trump fails when he goes on and on about how bad times are!
Well, they borrowed and spent obscene sums of money.
I was told that Clinton was the first Black president. Dems did win the WH for three terms or more back in 48.
I agree. But there are a lot of people who vote straight ticket because they are members of that party. And there are a lot of people who blame the current administration for all the issues that land on their kitchen table. Right or wrong doesn't come into play as we're talking about people's feelings.
The pandemic brought about tremendous government spending which had an impact on inflation. The lockdowns and forced business closures also had an impact on inflation due to the supply chain issues. There's no single cause but that doesn't matter as the inflation still happened and impacted a lot of people. There are some who made it thru that time ok and there are others who are suffering because they never had the money to back themselves up when it hit. I don't know how this will all impact the November elections but I'm confident there will be some impact.
Just from her waste down...
That;s a bit of an over-generalization. (Because each and every American People,person,he,she,they does not!
(If that's what were trying to get across, It would be accurate to say "Most of the American people", or "the majority of American people" or "nearly __% of American people (Fill in the blank).