Jun 15, 2024 5 min read

Blaming or praising a president for the state of the economy is politically popular but often inaccurate. Like the ocean tides, the economy expands and contracts according to its own rhythms. Presidents do not control milestones that influence the economy. Recently, these events included a worldwide pandemic, the Russian invasion of Ukraine, and policy decisions made by the Federal Reserve.

In October of 2020, Joe Biden and Donald Trump were tied in polls taken in the battleground states on the question of which candidate would best handle the economy. Last month, in the same contested states that will determine our next president, Trump held a 20% polling advantage on the economy.

This polling data is baffling because the economy has boomed under President Biden’s administration, with strong wage and job growth, lower prescription costs, and more. However, many voters are focused on higher commodity prices. They continue to blame President Biden for inflationary pressures beyond his control.

It would be disingenuous for any commentator to criticize consumers for their concern over the effects of higher prices. Even in a booming economy, inflation has an impact on the purchasing power of many working Americans. Moreover, a thriving economy does not prevent regional economic dislocations or problems unique to poor or young Americans.

It is not disingenuous to point out that while Biden cannot take all the credit for the booming economy, he also cannot be blamed for higher prices.

At the top of the country’s financial food chain, the Federal Reserve is in charge of administering economic policy. The Fed must choose between two very different economic outcomes. On the one hand, it can maintain higher interest rates to further reduce “sticky” inflation at the expense of full employment, economic growth, and stock prices. Alternatively, the Federal Reserve can reduce interest rates to keep unemployment low and the economy strong. This move risks a new round of inflationary pressure.

The Federal Reserve does not manage these two alternatives through a political lens or under political pressure. Its congressional mandate is to strive for a goldilocks, “just right” economic solution of lower inflation and full employment. When raising or lowering interest rates, timing is essential. Most Fed watchers believe it has achieved a good balance during Biden’s term in office by bringing inflation under control while avoiding a recession.

Voters should take the time to study our financial system and recent economic history before deciding how much weight to place on economic issues. Voters should not rely on political commercials or cable news. Both are propaganda wrapped in a grain of truth. What follows are some points to consider when researching the economy.

Biden’s economic record is better than Trump’s. Despite all the Republican noise proclaiming the opposite, by almost every measure since Biden took office, the economy has outperformed expectations. According to the economist and New York Times columnist Paul Krugman, “In May, for the first time in history, the Dow Jones Industrial Average closed above 40,000. Unemployment has now been below 4% for 27 months, a record last achieved in the late 1960s. Inflation is way down from its peak in 2022. U.S. economic growth over the past four years has been much faster than in comparable wealthy nations.” Krugman explains that these statistics all come from official agencies and independent, private business data.

Prices cannot return to pre-pandemic levels without a major recession. When an economy like ours is doing well, with plentiful jobs and increased wages, prices always go up and purchasing power goes down. Normally, consumers pay little attention to these incremental changes. The huge inflationary surge after the pandemic was an outlier event caused by supply shortages in computer chips and other essential goods. The Biden administration passed legislation providing $30 billion in grants and $25 billion in loans to build domestic computer chip facilities to avoid another inflationary shortage.

According to Gus Faucher, Chief Economist at PNC, the pandemic caused price increases of 22%. He warns his clients that, “For prices to fall 22%, moving them back to their pre-pandemic level would require a significant recession that would put tens of millions of Americans out of work. Instead, going forward, prices should increase slowly, the way they did before the pandemic.”

The president is not responsible for higher fuel prices. Presidents never want to be associated with higher fuel prices, but are powerless to make a difference. There have been six presidential elections since 2000. Ironically, prices have actually risen even more than average during these presidential election years: 49.9 cents vs. 48.5 cents per gallon through 2020. One would think that there would be a big decrease if presidents had any control over gas prices.

Trump complains that Biden’s promotion of electric vehicles and policies against oil and gas production are at fault. To the contrary, according to Reuters, the profits of the top five publicly-traded oil companies amounted to $410 billion during the first three years of the Biden administration, a 100% increase over the first three years of Donald Trump’s presidency. Fossil fuel jobs and energy production have increased to new records under Biden.

Presidents do not control the economy. In the upcoming election, placing too much emphasis on pandemic related inflation would be a mistake. In November, the focus should be on choosing a president who will preserve the future of our democracy, its institutions, and the rule of law.

Gary Stout is a Washington attorney.