President Joe Biden speaks during a stop at a solar manufacturing company that's part of his "Bidenomics" rollout on Thursday, July 6, 2023, in West Columbia, S.C. (AP Photo/Meg Kinnard)
When Joe Biden toured the U.S. in June on a mission to persuade the public that the economy has improved under his presidency, not everyone was buying it.
“Americans are worse off under Biden,” said Republican National Committee Chairwoman Ronna McDaniel.
The public agreed. A poll released in late June by the Associated Press-NORC Center for Public Affairs Research showed that 40 percent of Democrats thought Biden was mishandling the economy, while 34 percent approved of Bidenomics — the economic policies implemented since he took office in January 2021.
Unusual Whales, an options order flow platform that helps subscribers track and act on institutional options trading activity, tweeted on Aug. 30, “About 46% of renters in the U.S. are currently struggling to make ends meet, according to Harvard University researchers.”
While it is true that a growing number of renters are cost-burdened and spend more than 30 percent of their income on rent and utilities, the 46 percent number was based on 2019 data from before Biden was in office, according to Harvard’s Joint Center for Housing Studies (JCHS) report. So don’t blame that on Bidenomics.
In July 2022, Harvard’s Joint Center for Housing Studies (JCHS) reported that in 2019, 46 percent of renters were at least moderately cost-burdened. However, the share of cost-burdened renters was even higher in 2011, peaking at 51 percent before falling to 46 percent in the years before the pandemic.
“Strong demand, rising rents, and limited availability of affordable housing have led to high shares of cost-burdened renters across the country,” Harvard reported.
The share of cost-burdened renter households has grown even larger since 2019, reaching 49 percent of all renter households in 2021, according to Harvard’s more recent 2023 State of the Nation’s Housing report. Between 2020 and 2023, housing costs rose for renters in professionally managed properties by 23.9 percent, while for-sale home prices jumped by 37.5 percent. Harvard defines low-cost rentals as rental homes leased for less than $600 a month. That’s the maximum affordable price for renter households earning up to $24,000 per year – who comprise nearly 30 percent of all renter households.
How bad is the economy?
Economist and gold dealer Peter Schiff says it’s headed for disaster. Former U.S. labor secretary Robert Reich says this is the best it’s been in 50 years. JP Morgan, the largest bank in the U.S. by market capitalization, wrote on Aug. 10 that a recession appears to be off the table in 2023.
Schiff predicted in a series of tweets that the U.S. economy will be hit with a “full-blown financial crisis” before the Federal Reserve reaches its 2 percent inflation target, forcing the Fed to raise the target.
Commenting on Fed Chairman Jerome Powell’s speech in late August at the Jackson Hole economic symposium, Schiff wrote, “How can Powell give a speech about inflation and ignore the elephant in the room? The primary driver of inflation is soaring federal budget deficits. Despite his claims of Fed independence, Powell refuses to criticize (Biden). That ensures the inflation problem will get worse.”
In a recent interview on the far-right talk show “Real America,” Schiff criticized Bidenomics. While the Biden administration is touting its success, Schiff said, “What has Biden done other than increase government spending and add extra regulations into the economy? There’s nothing economic about that. It’s just a complete disaster.”
In March, when Silicon Valley Bank failed, Schiff said, “The Fed is once again responsible for another financial crisis, but it’s not the interest rate hikes, but the prior rate cuts that are to blame … when the Fed cut rates to zero it made a deal with the devil. The devil finally showed up to collect.”
Not only is Bidenomics working, the president’s economic policies are the most successful in the U.S. in 50 years, wrote Robert Reich, former U.S. labor secretary under the Bill Clinton administration, in an Aug. 2 Guardian opinion article. Reich is a professor of public policy at the University of California at Berkeley.
New economic data shows that inflation cooled to 3 percent in June, down from over 9 percent in 2022, and close to the Fed’s goal of 2 percent, Reich wrote. And as inflation has subsided, real wages have finally risen. Economic growth has accelerated, consumer spending is solid, and so is consumer sentiment – expectations that the economy will continue to do well.
Reich credits the Fed interest rate increases with helping slow the inflation rate, but he said those efforts are offset by Bidenomics’ massive public investments in infrastructure, semiconductors, wind and solar energy, and manufacturing. The Biden administration has added three other critical ingredients, Reich wrote: the threat of tough antitrust enforcement, a pro-labor National Labor Relations board, and strict limits on Chinese imports. Together, he wrote, “these policies are beginning to alter the structure of the American economy in favor of the bottom 90 percent.”
In its midyear 2023 outlook, JP Morgan noted that the U.S. economy, measured by real GDP, expanded 2-to-2.4 percent in the first half. Consumer spending drives 65 percent of GDP, according to JP Morgan. The bank expects real GDP to expand by 2 percent in the second half of 2023 and 0.5 percent in the first half of 2024.
The bank predicts the Fed’s fastest hiking cycle in decades will end as inflation gradually improves. The unemployment rate remains at a 3.5 percent low. “We expect the unemployment rate to drift higher to the upper 3 percent area by year end and low 4 percent area in 2024.”
U.S. consumer spending through the first half of 2023 has been resilient, but the restart of student loan payments in the fall “may add a slight headwind,” the bank said.
Most home mortgages are locked in at low fixed rates, supply chain bottlenecks are largely resolved and the housing market appears to be stabilizing in recent months after a 30-to-40 percent drop in activity through the second half of 2022. However, there is high uncertainty around the growth of lending at regional banks following the disruption earlier this year. Challenges in the $4.5 trillion commercial real estate sector could also intensify as leases come up for renewal and debt matures, JP Morgan wrote.
