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US economy under Biden: success or flop?

Important topic in the election campaign:US economy under Biden: success or flop?

Anna-Kleiser in front of the US Capitol

by Anna Kleiser, Washington DC

During the election campaign, there is little that is as important to voters as their own wallets. Under Biden, the economy has recovered thanks to aid packages. Inflation is a cause for concern.

US President Joe Biden speaks about his “Investing in America” agenda at Gateway Technical College in Sturtevant, Wisconsin.

US President Joe Biden faces several challenges in the development of the US economy during his term in office (archive photo).

Source: AFP

The issues that will determine the US election will become clear in November. The economy is at the forefront. The USA has overcome the consequences of the pandemic quite successfully – but a different feeling has taken hold among the population. It is the increased cost of living that people are clearly feeling.
Currently, there is hardly anything that gets as much attention as the economic situation. US President Joe Biden is touring the country to sell his economic policy. His vice president and Democratic presidential candidate Kamala Harris speaks of the “strongest economy in the world” and details her plans for the economy in campaign speeches.
Republican challenger Donald Trump accuses both of having ruined the economy and blames them for the high prices.
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Where the Biden administration scored points

In fact, hardly any industrialized nation has recovered so quickly from the shock events of a pandemic and the war against Ukraine. Three large, multi-billion dollar aid packages were responsible for this: the CARES Act (Trump), the American Rescue Plan (Biden) and finally the Inflation Reduction Act (Biden). They stabilized the economy.
  • Labour market: Under Biden, unemployment fell after the coronavirus pandemic, and his policies also accelerated job growth. It is one of the administration's greatest successes.
  • Economic growth: The US economy has grown – surprisingly strongly in 2023. Currently, the forecasts are weakening.
  • inflation: The cost of almost everything from food to gasoline to housing has risen – to a high of about nine percent. Inflation has now fallen below three percent.
  • National debt: Under Biden, the national debt continued to grow, albeit less strongly than under his predecessor, Donald Trump.
In addition, the Biden administration has succeeded in reducing drug prices and the amount of outstanding student loans for the first time in decades. In addition, there are numerous investments in infrastructure and the transformation to a sustainable economy.
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High prices as a result of investments?

The extent to which the economic stimulus packages are responsible for inflation and thus the high prices is a matter of debate among economists. Professor Frederick Floss from Buffalo State University put forward the theory on ZDFheute that without the measures there was a risk that the economy would collapse.

In his opinion, Biden's policies “may have been exactly what was needed to get out of the slow growth phase.” The US government followed the standard model in its response, said Floss.

Biden has risked inflation to stimulate growth, as economic theory dictates.

Prof. Frederick Floss, Buffalo State University

Other economists blame the economic shock caused by the pandemic – and thus an imbalance between supply and demand – for inflation rather than the stimulus packages.

However, experts agree that both major parties exaggerate their descriptions of the economic situation when it comes to their opponents. The pandemic recovery began under Trump, but Biden got Americans back to work.

Presidency: Trump or Harris?

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What Harris and Trump are now campaigning on

Now it all depends on the plans of presidential candidates Harris and Trump. Even though the power of US presidents over the economy is always limited – regardless of who is in the White House – their ideas are crucial. And they differ massively in this election campaign. One example is taxes: Trump promises massive tax cuts, while Harris wants to increase taxes for large corporations and the super-rich.

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How the US economy develops in the coming weeks is one of the decisive factors for this election. If unemployment and inflation remain low, that will help the Democrats. If the economy weakens, as the latest report from the Federal Reserve Bank suggests, it will help the Republicans.

Anna Kleiser is a correspondent in the ZDF studio in Washington.

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