Joe Biden’s Economic Record: A Thorn in Kamala Harris’s Side

The US presidential race was upended in July when Joe Biden dropped out and Kamala Harris took his place as the Democratic nominee. Since then, Donald Trump’s polling lead—which had widened both nationally and in the battleground states after his June debate with Joe Biden—has evaporated. Support for Kamala Harris has only strengthened with her selection of Tim Walz as the Democratic vice presidential candidate, her campaign’s record-breaking fundraising, the Democratic convention and the recent Trump–Harris debate on September 10.

Right now the polls are so tight that both candidates still have a strong chance of winning an electoral college majority on November 5. But the polls show that her net favourability rating (+0.9% based on the RealClearPolitics average External link.) is much higher than Donald Trump’s (-8.1%).

Yet Harris can’t seem to grow her polling lead, largely because political opinions in the US appear to be set in stone and independent and undecided voters are getting thin on the ground now that election day is less than seven weeks away. But there’s another major factor holding Harris back: The Biden administration’s economic record. Or, at least, voter perception of Biden’s record.

Voters just don’t think well of Biden: His net favourability rating is -13.6%. They have an even worse opinion of how he’s handled the economy (-20.4%) and inflation (-27.5%). These views are undermining Kamala Harris’s campaign. An ABC News/IPSOS poll External link. conducted after the presidential debate on September 10 showed that the biggest concerns for voters are the economy and inflation, but that more voters trust Trump (46%) than Harris (39%) to make the best economic policy decisions. The same holds true when voters are asked who will do a better job controlling inflation: 45% say Trump, while 38% say Harris. The economy is therefore a big selling point for Donald Trump—maybe even his biggest. Most national polls reflect this, although there’s one exception External link..

Voters View Biden’s Track Record Poorly

The generally more positive perception of Donald Trump’s economic stewardship mostly stems from what voters think of the economic conditions that prevailed during his term versus President Biden’s. The critical question in an election is still “Are you better off today than you were four years ago?” Obviously the pandemic and its profound repercussions, which marked both the end of Trump’s term and the start of Biden’s, make it hard to answer this question.

If we exclude the worst period of the pandemic from our calculations, we see that real GDP grew at almost the same pace during the first three years of the Trump administration (2.77%) and the last two years (from the first quarter of 2023 to the second quarter of 2024) of Biden’s time in office (2.82%). Unemployment was also remarkably similar in both periods, averaging 4.0% under Trump and 3.8% under Biden. Of course, the big difference between the two is inflation. On average, year-on-year growth in the Consumer Price Index came to 2.1% between January 2017 and December 2019 and 5.4% between January 2023 and August 2024. These periods exclude the worst of post-pandemic inflation and the initial impacts of the war in Ukraine. Aside from the rate of inflation, the cumulative increase in the cost of living is what really has Americans riled up. They’ve had to deal with prices soaring by around 20% since January 2021. This includes a jump of more than 21% for groceries, 23% for housing and 35% for gas (despite recent declines). The rising cost of living has forced households to make some tough choices External link. (graph 1), restricting their buying options, eating into their savings or pushing them to get side jobs. The number of people with more than one job rose by 7.9% from the end of 2019 to the end of 2023. Higher living costs have curtailed the growth of real household income, despite healthy wage gains. The median income External link. (in 2023 US$) was $81,210 in 2019 and $80,610 in 2023. That’s a 0.7% decrease, even though income surged 4.0% from 2022 to 2023.

The Biden administration’s economic record, especially on inflation and real household income, clearly isn’t that great. Yet, like us, most economists have been astonished by the resilience of the US economy in recent years. What surprised us was how little the economy was impacted by the massive upswing in interest rates by the Federal Reserve between winter 2022 and summer 2023. The average for the upper limit of the federal funds target rate has been 4.05% since the start of 2022. In the first three years of Trump’s term, the average was 1.76%. In addition, Americans can find consolation in comparisons to other major advanced economies. Post-pandemic growth was much more robust in the United States (graph 2) even though inflation ran a little hotter there.

The US’s strong relative performance and resilience to high rates aren’t solely the result of policies put in place by the Biden administration. However, measures like the March 2021 American Rescue Act, the August 2022 CHIPS and Science Act and the August 2022 Inflation Reduction Act have nevertheless supported the economy over the short and potentially long term. Americans are definitely unhappy, but things could have been worse. The country has also managed to avoid a recession so far. But the negative perception of Biden’s track record is so hard to erase that Kamala Harris will find it tough to capitalize on it, even though relatively speaking, Biden’s record isn’t that bad at all.