“Are you better off today than you were four years ago?” On October 28, 1980, just one week before the presidential election, Ronald Reagan asked voters that question. The then governor of California won by a landslide against president Jimmy Carter. Since then, it has become the electoral question par excellence.
Trump asked it repeatedly at his rallies in the final week of the campaign, while warning the U.S. economy was on the brink of depression. The reality, however, is that the president-elect inherits a robust economy, with unemployment near historic lows and inflation — the primary challenge of Joe Biden’s presidency — largely under control. The main issue remains the ballooning public deficit and escalating debt.
Trump claims the economy is a disaster, but that when he takes office, he will fix it “quickly.” So quickly, in fact, that it is already fixed. Thanks to the Federal Reserve’s recent monetary policies, the United States is achieving what economists call a “soft landing” — controlling inflation without triggering a recession or massive job losses, a term borrowed from the space race.
The Republican seized on the distorted October data — in which only 12,000 net jobs were created due to hurricanes Helene and Milton and the Boeing strike — to attack Biden’s economic management, joking that the figure was more fit for Walmart, than the United States. Trump called them “the worst numbers” in history, despite the fact that during his term, amid the Covid-19 pandemic, there was a month in which 20.5 million jobs were lost. And before the pandemic, in February 2019, there was another month when only 5,000 jobs were created. In his final full month in office, December 2020, 243,000 jobs were lost. His term ended with fewer jobs than when he first entered the White House.
Under Biden, jobs — propelled by pandemic recovery and a subsequent consumption boom — have been created every single month of his presidency, totaling 16 million new jobs. The unemployment rate, which stood at 6.7% at the end of 2020, has dropped to 4.1% and has remained below 4% for 26 consecutive months — the longest streak in half a century. In the 1980 debate, just after posing the first question, Reagan — aware that unemployment had risen under Carter — added another: “Is there more or less unemployment in the country than there was four years ago?”
GDP growth of 15.5%
U.S. gross domestic product (GDP) fell by 2.1% in Trump’s final year in office, and grew 5.8% over his four years in office, according to IMF data. In Biden’s four years, the economy has grown 15.5%, according to the IMF’s forecast for this year. In the third quarter, it grew at a rate close to 3% per year. Even if the pandemic years of 2020 and 2021 are excluded to account for distortions, the comparison still favors Biden.
Inflation has been Biden’s major economic Achilles’ heel, and it largely explains Trump’s landslide victory in the election. Prices rose more than 20% during Biden’s term, compared to less than 8% during Trump’s four years in office. External factors have been crucial once again. The pandemic, supply chain disruptions, and the war in Ukraine led inflation to peak at 9.1% in June 2022, the highest level in four decades — echoing the inflationary surge that largely cost Jimmy Carter his presidency.
Trump has repeatedly claimed at rallies that he will end inflation. However, the problem has largely been resolved. Prices rose by only 2.4% over the past 12 months, down from 2.5% during Trump’s pre-pandemic 12 months, according to Reuters data. Looking at the Federal Reserve’s preferred PCE index, inflation is now at 2.1%, just one-tenth of a percent shy of the central bank’s target for price stability.
Although inflation has fallen, prices have not returned to pre-inflation levels, which still weighs on voters, many of whom recall how much it cost to dine out or shop four years ago. However, citizens often overlook the other side of the equation: wages have also risen. In fact, real disposable personal income — adjusted for inflation — has increased by 10%, according to Reuters data. Of course, this is an average figure, so some households may not have felt this improvement.
As for household net worth, which is highly influenced by house prices and the performance of the stock market, it has also risen significantly. According to Federal Reserve data, household net worth stood at $164 trillion at the end of the second quarter, the most recent data available. This is $32 trillion more than at the end of 2020. Indeed, one of the biggest beneficiaries of this rise in wealth during Biden’s term has been staunch Trump supporter Elon Musk, whose net worth has increased by more than $50 billion. The stock market surged by nearly 50% during Biden’s administration and continues to break records.
In reality, America’s biggest economic challenge is its public finances. The deficit stands at 6% to 7% of GDP, and the federal debt has increased by more than $7 trillion during Biden’s term (though it increased even more under Trump), according to Federal Reserve data. Trump entered the election without any credible proposals to address this issue.
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