Biden's economic truths are real...real whoppers!
Is an airplane vacuumed into the air from above, or is it pushed into the air from below? Aeronautical engineers still disagree on Bernoulli's Theorem — how airplanes fly is all about the way you explain it. And in the ultra-managed world of über-scripted "Biden-speak," good luck really understanding what's going on with the economy. George Orwell's quote has never been more applicable, "the very concept of objective truth is fading out of the world."
A few weeks ago, Biden touted his stewardship of the economy during his first year in office. And yes, some of the numbers are amazing — too amazing. It's not that they are incorrect, although some are; they're just misrepresented. Giving Joe the benefit of the doubt, they're out of context — way out of context. And while we are all accustomed to political spin, his statements stretch far beyond the usual hyperbole.
Right out of the blocks, here's the first sentence of the White House news release: "The GDP numbers for my first year show that we are finally building an American economy for the 21st Century, with the fastest economic growth in nearly four decades[.]" Is that true? Yes, yes, it is. Now for the missing context.
Using Federal Reserve data, in the third quarter of 2019 — the last quarter before COVID impacted the U.S. economy — Trump's economic stewardship had amassed an annual GDP of 19.2 trillion dollars. Then, weathering shutdowns, layoffs, and worker job abandonment, the GDP growth rate collapsed 36 percent in the first half of 2020. Starting from that record trough, of course, we should expect a dramatic rebound. But while it's true that the growth rate over the past two quarters has been exceptional, the GDP is now 19.8 trillion dollars, which, at best, is just an average outcome.
Historically, since the end of WWII, through booms and recessions, the U.S. economy has averaged a 3.1% annual growth rate during those 75 years. And, if we measure the two years from just before the COVID economic recession to the present day, Biden's touted record growth period in GDP logs in at...3.1%! It's an average result measured from peak to peak. It's all about context.
Next up? Let's look at how Biden's economy has helped American workers, according to him. In that same White House release, he made this flat unqualified statement, "Today, Americans are finding better jobs with better pay and better benefits." Okay, that's not just spin or lacking context; that's what my grandmother called a freight train load of...
Workers aren't better off; they're worse off! Biden's own government agency, the Bureau of Labor Statistics, in its most recent news release, just stated, "From January 2021 to January 2022, real average hourly earnings decreased 1.7 percent, seasonally adjusted." Where are Facebook and Twitter with the fact-checks and content warnings on Joe? Doesn't anyone in the White House call anyone before they spoon-feed him his lines?
Changing topics and continuing the theme of ignoring reality, Biden also said, "My economic strategy is creating good jobs for Americans, rebuilding our manufacturing, and strengthening our supply chains here at home to help make our companies more competitive." We've already covered the "good jobs" part; let's talk about strengthening supply chains and making U.S. companies more competitive. Sorry, but we have to look at some numbers again — real numbers.
Over the past year, from Q4 2020 to Q4 2021, the Federal Reserve said American exports grew by 400 billion dollars. I agree: that's a big number. We could argue that all economic sectors have, and should have, grown while recovering from the COVID recession, but we're not small people. Instead, let's look at another Fed number: imports. During that same period, imports increased by 600 billion dollars. That's 50% more than our export growth! So much for making U.S. companies more competitive, but at least Biden strengthened the supply chain — the foreign supply chain.
Let's wrap this all up. The GDP grew at a rate that is average, workers are worse off than a year ago, and U.S. manufacturing is less internationally competitive while foreign firms are dominating. Toss on top of this that there was no mention in the news release of soaring inflation, staggering deficits, or rising interest rates.
We all understand Beltway spin, but this is a lot more than just promising a chicken in every pot. Meanwhile, just how do airplanes fly?
Kevin Cochrane is an economist that teaches economics and business at Colorado Mesa University. He previously taught at the University of California and was a senior national banking executive.