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Two Years, 10 Metrics: Assessing Biden’s Presidency

Bloomberg Opinion considers the strengths and weaknesses of Joe Biden’s first two years in office and what they suggest about the next two.

President Joe Biden was the beneficiary of two years of unified Democratic control in Washington that allowed him to make significant progress on his economic and legislative agendas. Political gridlock will likely be the hallmark of the rest of his term as he wrestles with a divided Congress. Under his watch we’ve seen inflation flare and start to recede, massive job creation, rising interest rates and big gains and losses in financial markets. Going forward, Americans will continue to hold the president accountable for a potential recession, surging immigration at the southern border and persistent economic inequality. As Biden starts his campaign for a second term, Bloomberg Opinion columnists evaluated these and other key measures of how the nation has fared under his administration, and the challenges ahead.

Metrics

Jobs growth is making history

Despite robust hiring, wages aren’t keeping up with rising costs

Headshot of Karl SmithKarl W. Smith

Notes: Real average hourly earnings for non-supervisory workers; nonfarm employment. Sources: Bloomberg; Federal Reserve Bank of St. Louis

Biden is well on his way to becoming the greatest jobs-producing president in US history. Employers added more than 7 million workers to nonfarm payrolls in 2021 and followed that up by hiring an additional 4.8 million workers in 2022 — the second-best year on record. The strong labor market allowed the economy to recoup all 22 million workers that were let go in the early days of the Covid-19 pandemic — and then some. The unemployment rate is back to a five-decade low of 3.5%.

Of course, presidents are given too much of the credit when times are good and too much of the blame when times are bad. And much of the stage was set for a rebound in the labor market in 2020, before Biden took office. That was when the government quickly provided fiscal stimulus designed to support the economy and businesses through the pandemic.

Biden administration

The news isn’t so great when it comes to wages — at least not the second year of the Biden’s term. Yes, earnings grew an average of 5.2% year-over-year in 2022, which is almost double the pre-pandemic average. But after considering inflation, which averaged 7.1%, workers are finding it harder to make ends meet.

This is a big problem for Biden. If real wages don’t turn positive and soon, preferably through a significant slowdown in inflation, then voters will give his administration no credit for all the jobs created. Make no mistake — it only gets tougher for Biden on the jobs front from here. With a significant slowdown in the economy forecast this year, or even a recession, the median estimate of more than 50 economists surveyed by Bloomberg is for the unemployment rate to rise to 4.4% by the end of 2023 and to 4.8% in 2024 — both higher than pre-Covid levels.

The inflation spell has broken

Investor expectations are historically a good predictor of consumer prices

Headshot of Matthew WinklerMatthew A. Winkler

Note: Breakeven data, measure of future inflation expected by Treasury investors, available starting 2004. Source: Bloomberg

When the Consumer Price Index increased 9.1% in June from a year earlier, Republicans and most of the news media were certain the fastest inflation since November 1981 would result in a massive Red Wave repudiating Biden and his fellow Democrats in the midterm elections. But to an extent not seen since 1934, the party in the White House prevailed, gaining another senator who widened the majority while losing a mere eight seats in the House where Republicans barely seized the speaker’s gavel.

Biden administration

For Biden, inflation and the expectation of a wage-price spiral proved to be a lot less than met last summer’s eye. That’s because the CPI decelerated for nine consecutive months, to 5.0% in March, marking the biggest retreat since late 2008 and early 2009. The inflation rate, already poised to be 8th lowest among 34 developed countries, likely is further diminished by the most aggressive credit-tightening by the Federal Reserve since the 1980s. All of which makes the US bond market the world’s best performing among the Group of Seven developed countries.

Zero coupon inflation swaps, a closely followed indicator of traders’ bets on inflation, reveal year-over-year CPI will be about 2.45% within a year, or just half a percentage point above the Fed’s target, according to data compiled by Bloomberg. Biden may be presiding over the worst cost of living rise in four decades, but the trend increasingly is his friend with unemployment at 50-year lows.

A soft landing is now possible

Commodities, stocks and the dollar have performed well since Biden took office; bonds not so much

Headshot of Jonathan LevinJonathan Levin

Source: Bloomberg

For all the financial gloom in the past year, the Biden market hasn’t been nearly as bad as it has often been portrayed. The S&P 500 Index returned 11% since Biden’s inauguration, the mighty dollar strengthened 12% and commodities roared. The weak link, of course, has been the bond market, where Treasuries lost 11% on a total return basis. As my colleague Matt Winkler notes, US bonds still outperformed the rest of the world, and reasonable people can disagree about where to place the blame for the rout, but that’s little solace to US holders of bonds who have suffered a big loss. For everyday Americans who are saving for retirement, the upshot was that the typical 60/40 portfolio went nowhere (+0.4% in the period).

Biden administration

On Wall Street, Biden’s first significant economic move is still likely to be remembered as his most consequential: the American Rescue Plan Act of 2021, which — among other things — sent out a final round of $1,400 direct payments to households when many experts thought the economy no longer needed help. Biden’s opponents — and indeed, former ally Larry Summers — will forever point to the package as one culprit in the overheating of the economy and the resurgence of inflation after four decades of dormancy. If the Federal Reserve’s war on high and volatile prices ultimately pushes the US into a recession this year, the legislation could haunt the president for years to come. But if the surprising economic strength of the first quarter persists, there may yet be a path to a so-called soft landing in the economy. If that happens, the Biden market could well be back on solid footing just in time for his reelection campaign.

Household wealth broke records

And saw another bump up at the end of 2022 after declining the previous two quarters

Headshot of Alexis LeondisAlexis Leondis

Source: Bloomberg

Since the Great Recession, Americans’ overall wealth had mostly been on a tear, buoyed by surging stock and home prices. Household net worth, the value of people’s assets after subtracting their outstanding liabilities, reached a record $150 trillion at the end of 2021, Biden’s first year in office.

Last year, things got more volatile amid the economic slowdown and surging inflation.

Household net worth recorded its biggest drop ever in the second quarter of 2022 and continued falling in the third quarter, according to the Federal Reserve. But wealth rose again in the final quarter of the year, thanks to a gain in the value of equity holdings.

Biden administration

Where it’ll head next is anyone’s guess, but given how closely people’s riches are tied to the stock and housing markets, it’s fair to say we’re unlikely to see the same kind of record-setting wealth as 2021.

Still, it’s hard to argue that’s going to be a problem for Biden. At $147.7 trillion at the end of last year, household net worth is still close to its record high.

Moreover, the amount of money Americans have built up in checking, saving and money market accounts, has continued to soar during Biden’s term. While it dipped slightly at the end of 2022 compared to the prior quarter, it's still almost five times where it was at the end of 2019, thanks to higher wages and pandemic-era stimulus measures.

A final note: the Federal Reserve figure measures wealth for those who have assets such as stock portfolios or 401(k)s, and own their homes. About 40% of Americans don’t, so it’s not a good indication of how less affluent Americans are doing.

Income inequality is widening

Those making more than the median income all gained ground, while those below the mark are now making even less

Headshot of Allison SchragerAllison Schrager

Note: Data are combined income for all family members 15 years and older during the past 12 months. Source: S. Flood et al., IPUMS-CPS, University of Minnesota

Economic inequality rose in many developed countries since the 1980s, and especially so in the US. In some ways it’s gotten worse during Biden’s administration, in other ways it got better.

In 2021 an American household in the top 90% earned 14.2 times a household at the bottom 10% — an increase from the end of 2020 just before Biden took office. This reverses what were glimmers of hope before the pandemic. Inequality lessened after 2017 when the economy grew enough that lower earners got some of the biggest real wage gains they’d had in years. In 2019 the top 90% earned 12.6 times the bottom 10%. But income inequality worsened during the pandemic and, as inflation soared under Biden’s watch, it wiped out any wage gains for lower earners.

Biden administration

We may be seeing some improvement; some recent research suggests that lower earners had slightly higher wage gains in 2022. It’s a promising trend, but a drop in the bucket when it comes to narrowing the gap that emerged since the pandemic.

Alternatively, inequality is improving based on wealth, which includes assets such as real estate and stocks. After reaping gains in 2021, the richest Americans lost lots of their wealth when markets fell in 2022, narrowing the gap between the richest and poorest in the past year. But it’s not clear that it made anyone better off.

How inequality will fare during the remainder of Biden’s terms will depend on the economy. If inflation falls and the labor market remains tight, income inequality will decline further and perhaps restore the progress made before the pandemic. But a recession would likely worsen inequality because lower earners tend to have bigger earnings cuts and longer spells of employment.

Health coverage for more Americans than ever

Fewer people are going without insurance as more sign up for improved benefits

Headshot of Lisa JarvisLisa Jarvis

Notes: Data for 18–64 year olds at the time of interview; 2022 figures are through June; figures don’t add to 100 due to rounding. Source: National Health Interview Survey

Two years into his presidency, Biden continues to make US health care cheaper and more comprehensive.

In August, the president said that the portion of Americans uninsured hit a record low of 8% in the first quarter of 2022, driven by two years of steadily improved uptake of public health plans by adults. Insurance sign-ups during the end-of-year enrollment period also broke records: 16.4 million people purchased coverage through a public plan, including 4.4 million new enrollees, a 36% increase over 2021.

Biden administration

Improved health-care coverage coincided with the passage of legislation intended to make it more affordable. The Inflation Reduction Act included several components that provide near-term savings: It extended by three years subsidies that reduce the cost of insurance purchased through the Affordable Care Act’s marketplaces; it capped out-of-pocket costs for insulin at $35 for prescriptions covered by Medicare Part D; and it made vaccines covered under Part D free.

The other big health-care achievement in the IRA will take longer to help patients: giving Medicare the power to negotiate the price of certain medicines. That feat is expected to lower seniors’ out-of-pocket costs for medicines while saving the government nearly $100 billion through 2031.

But the lengthy negotiation process means those savings won’t materialize — for seniors or the government — until 2026. Negotiations will finally kick off on Sept. 1, 2023, when the Centers for Medicare & Medicaid Services announces the first 10 drugs selected for the program. That will be followed by a yearlong back and forth between CMS and pharma companies to arrive at a maximum fair price that goes into effect the following January. Each year, a new cohort of products will be added into the mix.

Deadly crimes are declining

Murder rates increased when Covid first hit during the Trump administration and are starting to fall during Biden’s

Headshot of Justin FoxJustin Fox

Sources: FBI through 2020; AH Datalytics estimates based on crime reports from 93 cities (2021–22)

The murder wave that began in the summer of 2020 appears to have crested, with AH Datalytics’ latest compilation of police reports from 93 US cities showing a 5.1% decline in homicides in 2022. That’s good news but still leaves the homicide rate higher than in any year from 1998 through 2019. It’s also not clear that crime in general is headed down.

Reports from individual cities and the Major Cities Chiefs Association indicate that crimes such as robbery, which declined earlier in the pandemic, rebounded in 2022. In New York City, where homicides were down 11% in 2022, overall crime was up 22%, although monthly statistics showed it was starting to go down toward the end of the year.

Biden administration

Reliable national crime statistics from the Federal Bureau of Investigation are sadly unavailable. As police departments across the country struggle with a new reporting system, the agency declared that it is “unable to make confident statements about national crime trends” for 2022, and even its 2021 statistics are accompanied by so much uncertainty that we’ve chosen to use AH Datalytics’ estimate for that year’s homicide rate.

Law enforcement is mostly a state and local matter, but Biden has pushed for and received increased federal funding for police hiring and signed into law the first significant federal gun-reform legislation in decades. Concerns about crime appeared to hurt some Democratic candidates in the 2022 midterms, so showing progress over the next year and a half will be important for Biden.

Border crossings are surging

There has been a huge increase in migrants encountered along the southern border

Headshot of Eduardo PorterEduardo Porter

Note: Fiscal years ended Sept. 30. Source: US Border Patrol

The numbers at the border aren’t looking good. In the fiscal year that ended Sept. 30, more than 2.2 million foreign nationals were stopped by border patrol agents trying to make their way into the United States. That is some 600,000 more than in the year 2000, the previous peak, when undocumented immigrants were arriving en masse to serve a booming construction industry. With the new Republican House majority ready to use the chaos at the border to clobber the Democrats, this number represents Biden’s most significant vulnerability.

The chaos isn’t entirely Biden’s fault. The most recent surge of people across the border started during the Trump administration in 2018. From Venezuela to Cuba, forces driving migrants north — Covid, climate change, political unrest and economic collapse — aren't driven by US policy shifts. But the president does bear a share of blame. His urgency to dismantle the unforgiving barriers raised by the Trump administration and allow more asylum applicants to enter the country created an illusion for many of the world’s downtrodden that they would now have a shot at staying.

Biden administration

The administration knows it’s in trouble. In early January it announced it would grant up to 30,000 two-year visas a month to Venezuelans, Nicaraguans, Haitians and Cubans who had a sponsor in the US and apply close to home, as opposed to at the US border. If they try to come irregularly they will be quickly expelled to either their home country or — at a rate of up to 30,000 a month — straight back to Mexico.

Coupling new legal channels to enter the US with the rapid expulsions of those arriving outside the rules makes sense. But it is unclear whether the plan will work. While encounters with migrants from these countries has fallen since December, they are running at similar levels to a year ago. Moreover, it is unclear how immigration will respond to the end of the health emergency in May, which provided the legal grounds for their expulsion. With the global economy softening, the forces pushing migrants from their homelands are unlikely to recede. 2023 could offer a repeat of last year.

Spending on green initiatives is off the charts

Investments in deploying low-carbon technologies in the US are higher than ever

Headshot of Liam DenningLiam Denning

Note: “Other” includes nuclear power, energy storage, sustainable materials and carbon capture and sequestration. Source: Bloomberg NEF

The Inflation Reduction Act may not have been the Green New Deal progressives had hoped for, but it’s still the biggest piece of federal climate legislation passed yet. For it to mean anything, however, it must foster a multitude of new green deals: Investment in new wind projects, fleets of electrified vehicles and other clean technology.

Biden came into office amid a bubble in clean-tech stocks; a bubble his own victory inflated further. That has since subsided somewhat. But the real test for Biden’s green agenda isn’t Tesla Inc.’s stock price but how much money is actually being spent. Think of the IRA’s roughly $370 billion cleantech budget as a giant bag of green carrots designed to lure in multiples of that — trillions — in private commercial and consumer spending. There can be no energy transition unless we literally buy into it.

Biden administration

Investment in deploying clean technology in the US surpassed $100 billion for the first time during Biden’s first year in office. In 2022, investment hit a new record of $141 billion. But the scale of Biden’s ambition — cutting US carbon emissions roughly in half from 2005 levels by 2030 — demands much more, and quickly. Bloomberg NEF’s net-zero scenario models a US annual spending requirement of more than $500 billion per year through 2025, and rising from there.

It is, of course, early days for the IRA, with the first dollars being released just recently, so it will take time for their impact to be seen in the investment tracker. That said, it isn’t just the ever-shortening timespan we have to arrest and cut emissions bearing down on us. We are now closer to the 2024 presidential election than we are to the last one. The agencies tasked with disbursing the IRA’s subsidies legislatively have a decade to do so. Politically, they will want to get as many facts established on the ground as possible in the next two years.

Biden remains an unpopular president

But his approval rating isn’t low enough to threaten support among key Democrats

Jonathan BersteinJonathan Bernstein

Note: Data are 30-day trailing averages. Source: Gallup

Biden remains relatively unpopular in his third year in office, with more Americans disapproving of his performance than approving of it, polls show.

Still, the president is just popular enough, with an approval rating above 40%, that prominent Democrats have supported his decision to seek a second term.

Biden’s approval rating remains among the worst of any of the 14 polling-era presidents after the same number of days in office. At the 27-month mark of his administration, Biden ranks roughly 11th of 14 presidents in terms of popularity, with about 42% of voters approving of his performance, according to FiveThirtyEight calculations based on reliable polls. (RealClearPolitics puts him at about 43%.) That puts Biden ahead of only Donald Trump, Ronald Reagan and Jimmy Carter at this stage in their presidencies.

Biden administration

One trend Biden’s camp might find reassuring: The president’s approval rating was at its lowest last summer when inflation was surging. That suggests good economic numbers in the coming months would boost his popularity.

His summer low point in the high 30s wasn’t great, but if it winds up being the worst he ever fares over four years, it will be higher than the low points of seven of the 13 other polling-era presidents.

Third-year presidential approval ratings aren’t a good predictor of reelection chances. But they can matter in other ways: Media will take the numbers into account in their coverage, and members of Congress and others in government might have approval ratings in the back of their mind when they decide whether to push back on a presidential policy decision.


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