If you’re an incumbent president running for reelection, you have to convince voters they’re better off than they were four years earlier.
This is where Joe Biden is running into trouble.
Biden’s approval rating is stuck around 40%, and Americans rate his handling of the economy even worse. In a recent New York Times poll, swing state voters said they trusted former President Donald Trump over Biden on economic issues by 59% to 37%, the biggest gap of any issue. Voter mistrust of Biden on the economy, in fact, may be the only thing keeping Trump competitive, given the 91 criminal charges he faces and general disgust with Trump beyond his base in the Republican Party.
The Yahoo Finance Bidenomics Report Card rates the Biden economy a B, based on six metrics we’ve been tracking since Biden took office in 2021. Using data provided by Moody’s Analytics, we compare Biden with seven prior presidents and base his grade on performance relative to his predecessors. That allows us to compare the Trump and Biden economies directly, at the same point in each presidency. And it’s clear why many voters feel they were better off under Trump.
The most telling metric we follow is average hourly earnings, adjusted for inflation. This single chart may explain better than any poll why Biden is struggling with voters. (Note: All of these comparisons are through October of each president’s third year in office, so they don’t include the effects of the 2020 COVID pandemic on the Trump economy.)
Real incomes have dropped by about 1% since Biden took office. Under Trump, real incomes were up about 3%. Biden’s underperformance is entirely due to inflation, which on the whole has risen by more than nominal income during his term. Biden’s not the worst on this measure; Jimmy Carter and George H.W. Bush score worse. Both of them, notably, lost reelection bids.
The trend on inflation-adjusted income is finally going in the right direction. Real income growth flipped from negative to positive earlier this year, which means incomes are now growing by more than inflation and consumers are regaining lost purchasing power. So voter attitudes toward Biden might improve and help Biden dig out of the hole he’s in.
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Biden talks a lot about the economy, emphasizing what’s going right. Overall job growth under Biden has been the strongest of any president in history, and far stronger than it was under Trump.
Manufacturing employment is another bright spot for Biden. The only president to do better in our tracking was Jimmy Carter in the 1970s, when manufacturing was a much bigger part of the economy.
If you had to guess which president oversaw stronger GDP growth, who would you choose? The economy generally did well under Trump prior to the COVID pandemic in 2020, yet GDP growth has been a touch stronger under Biden:
We also track US exports, because that tells us how the nation is doing on trade. Here, too, Biden beats Trump, who waged a trade war that generally backfired.
The only other category in which Trump is ahead of Biden is stock market performance. But stocks are still up under Biden, and the chart below is through the end of October, so it doesn’t capture the 8% rally in stocks since Nov. 1. Besides, the stock market doesn’t affect voter attitudes nearly as much as kitchen-table issues such as income and job security.
So the story of the Biden economy is one that looks good on paper and has just one basic problem: high inflation that has cut into living standards.
Inflation is getting better, falling from a peak of 8.9% in 2022 to 3.2% today. Most economists think inflation will continue to abate, falling close to normal ranges by the end of 2024. By Election Day 2024, the data may show that typical Americans are a bit better off than they were four years earlier. Biden’s challenge is getting them to believe it.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman.
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