As voters headed to the polls on Super Tuesday, many cast their votes with one issue as their top priority: the current state of the U.S. economy.
a Recent CBS News Poll While 65% of Americans remember the economy as good under former President Donald Trump, 38% have a similarly positive assessment of the current economy under President Joe Biden. It turned out that it was.
Biden and Trump win on Super Tuesday lead to victory According to CBS News projections, nearly every state has contested nominations between Democrats and Republicans. This raises the possibility that the two will face off again in the general election in November.
In fact, nearly 6 in 10 voters surveyed by CBS News say the U.S. economy is worse under the Biden administration, even though economists are far more optimistic about the country’s economic downturn. Zuda. Stronger-than-expected GDP And the unemployment rate is low. Rather than going into a recession, as many economists thought, predicted last yearthe economy appears to be on track for continued growth and creating more jobs while inflation recedes.
The key to the disconnect lies in how voters experienced the economy in the first three years of Trump’s presidency, from 2017 to 2019, before the pandemic’s upheaval, compared to the post-pandemic 2020. there is a possibility.
“From an economic perspective, these are two very different periods,” said Gregory Daco, chief economist at EY. “The period from 2017 to 2019 was the longest end of a business cycle in history. The economy was strong and the labor market was very strong. Our unemployment rate was the lowest in 50 years, and our economic growth rate was It was less than 2”%, but we are still making progress. ”
Overall, “the economy was essentially in a fairly stable state before the pandemic,” he added.
In other words, the economy was doing well before the pandemic, providing a strong, if not great, environment. However, the post-pandemic economy has caused a lot of disruption. labor shortage And inflation is at its highest in 40 years. Inflation has since declined but remains above pre-pandemic levels.
“There’s a feeling that we’re still recovering from the shock,” he added.
Indeed, the president often gain trust Despite the limited influence the commander-in-chief has over such a complex system, he is blamed when the economy is doing well and blamed when it is bad. In fact, economic performance is often tied to boom-bust cycles and has less to do with who occupies the White House.
Here’s what the data says about the 2017-2019 economy under the Trump administration and the 2021-2023 economy under the Biden administration.
inflation
The main difference between the two periods comes down to inflation, an increase in the prices of goods and services.
From 2017 to 2019, the inflation rate hovered around 2% per year. This is a low enough level that people generally do not notice any changes from day to day. However, as COVID-19 shuts down global supply chains and causes labor shortages, prices will skyrocket, pushing inflation to the highest level in 40 years in June 2022.9 It reached .1%.
Suddenly shoppers are reminded of inflation every time they go to the grocery store, and the problem remains problem For consumers. Although inflation has subsided, prices have not returned to pre-pandemic levels and continue to strain consumer budgets.
“We are emerging from an environment where inflation was a key theme, a key issue, a key issue for most of the 30 years before the pandemic,” Daco said. “It’s gone from a trivial issue to a substantive issue. To me, that’s the main reason why people are feeling more depressed than the economic situation indicates.”
Consumers value predictability when it comes to prices, a point Federal Reserve Chairman Jerome Powell emphasized in an interview. CBS News last month.
“I cannot overstate how important it is to restore price stability, which means that inflation is low and predictable and that people need to think about it in their daily lives,” Powell said. That means no,” he said. “That’s where we’ve been for 20 years. We want to get back there.”
wage
Pre-pandemic wage growth was about 3% a year, a solid increase but far from the growth seen in the late 1990s, when workers enjoyed wage increases of about 5% a year.
But more importantly, wage increases from 2017 to 2019 inched ahead of inflation, giving American workers more purchasing power.
That all changed due to the pandemic, with wage growth unable to keep up with inflation. Suddenly, workers lost purchasing power, a problem they faced every time they went to buy groceries. soaring egg prices And more expensive basics. With wages falling below inflation, many felt their position was being lost.
Good news for workers. Wages started trending ahead of inflation about a year ago.
GDP
One of the strengths of the post-pandemic period has been that gross domestic product, or the economy’s total production of goods and services, has exceeded expectations.
While voters may not be paying attention to GDP on an individual level, economic growth allows companies to expand and hire more workers. Businesses can also afford to pay higher wages when demand for goods and services increases.
Importantly, the economy has so far avoided recession. Many economists expected this recession to occur as a result of the Fed’s successive interest rate hikes. Raising interest rates typically causes companies to cut back on spending to account for higher borrowing costs.
“Like the Energizer Bunny, the U.S. economy never stops,” Oxford Economics said in its January GDP report.
Ratings of the Trump and Biden economies
Many economists now say the United States has shown remarkable economic resilience, avoiding recession and continuing to add jobs.
However, Daco noted that the economy is still recovering from the shock of the pandemic. And Americans are also facing other changes, such as higher interest rates as a result of the Federal Reserve’s fight against inflation. This means it’s more expensive to buy or borrow money to buy a house or car now than it was during President Trump’s term.
The economy in 2019 was “an A economy,” Daco said. “It was growing in a stable state.”
What’s the economy like now? “We’re at stage B towards A,” he added. “We’re making progress, but we’re not there yet.”
