The objective economic data proves pretty convincing when it comes to the Biden Boom in 2021. Joe Biden's comparisons to America's recent presidents finds him on top or at number 2 on all the big economic indicators, according to Bloomberg's Matt Winkler.
U.S. financial markets are outperforming the world by the biggest margin in the 21st century, and with good reason: America’s economy improved more in Joe Biden's first 12 months than any president during the past 50 years notwithstanding the contrary media narrative contributing to dour public opinion.
Exceptional returns from dollar-denominated assets, especially the S&P 500 Index in both absolute terms and relative to its global counterparts, can be attributed to record-low debt ratios enabling companies to reap the biggest profit margins since 1950. Corporate America is booming because the Biden administration's Covid-19 vaccination programs and $1.9 trillion American Rescue Plan reduced the jobless rate to 4.2% in November from 6.2% in February, continuing an unprecedented rate of decline during the Covid-19 pandemic.
Consider that real, or inflation adjusted, gross domestic product surged at an average annual rate of 5.03% in each of the first three quarters of 2021, and is poised to expand 5.6% for the year based on the average estimate of more than 80 economists surveyed Bloomberg. If that forecast proves accurate, it would be more than 2.8 times the average between 2000 and 2019 and double the average since 1976.
All of which makes Biden's first year in the White House the standout among the seven previous presidents, based on 10 market and economic indicators given equal weight. According to data compiled by Bloomberg, no one comes close to matching Biden's combination of No. 1 and No. 2 rankings for each of the measures:
Per capita disposable income, which rose 1.08% this year, is the only comparable weakness for Biden, trailing Donald Trump’s 2.17%, George W. Bush’s 2.01%, Jimmy Carter’s 1.80% and Ronald Reagan’s 1.42%.
- Gross domestic product (1)
- Profit growth (1)
- S&P 500 performance (2)
- Consumer credit (1)
- Non-farm payrolls (2)
- Manufacturing jobs (2)
- Business productivity (2)
- Dollar appreciation (2)
- S&P 500 relative performance (2)
GDP growth in every incoming administration during the past four decades never exceeded 2.74% until 2021. Biden is now positioned to surpass Carter (5.01%) as the GDP champion of presidents since 1976. Much of the credit goes to The American Rescue Plan, which poured $66 billion into 36 million households and reduced the child poverty rate by 50%, helping the U.S. recover faster from the pandemic than most other nations.
The downside to that is record corporate profits that absolutely are not being shared with workers, and in 2021 economic inequality got considerably worse, even with Biden's recovery act putting billions in the pockets of American families, and oh yeah, significant inflation, even more so than under Carter.
Biden, like Carter, now faces the political fallout of the accelerating inflation from global supply chain breakdowns associated with the pandemic even though maintaining stable inflation and interest rates are the primary responsibility of the Federal Reserve, and the Fed said it's prepared to tighten monetary policy in 2022.
Biden, unlike Carter, benefits from the $29 trillion U.S. debt market. In contrast to the 1970s and early 1980s, confidence in the Fed’s ability to get inflation back under control is unimpaired, reflected in the yield on the benchmark 10-year Treasury note fluctuating below 1.7% as inflation hovers at 4.1%. When Carter was in the White House, investors lost confidence in the Fed, evidenced by the 10-year yield rising to 12.6% with inflation reaching 9.65%.
The clear message from the market that tells all other markets what to do is that the people with the most at stake are betting on the Biden economy.
The problem is the GOP continues to put on a master class of blaming Biden for Trump's disastrous economy. For those of you keeping score on Tang The Conqueror's marks among the last 8 presidents:
- Gross domestic product (T-3)
- Profit growth (5)
- S&P 500 performance (4)
- Consumer credit (2)
- Non-farm payrolls (5)
- Manufacturing jobs (3)
- Business productivity (5)
- Dollar appreciation (8)
- S&P 500 relative performance (5)
And remember, this is comparing their first year in office. Trump trashed the dollar in his first year in office and coasted on Obama's economic performance, before cratering the economy entirely in his last year in office.
Biden is kicking ass and bringing the dollar back around. The downside again is the hefty inflation, but Biden can still raise rates and almost certainly needs to.
Keep that in mind. Biden's doing very well.