September 09, 2022

Labor Day weekend marks the midterm elections season “opening day”. President Biden hit the ground running with a couple of speeches arguing that he was fighting for the soul of America. In the process attacked a large segment of the voting population by making several derogatory statements about people who voted for his opponent, calling them Semi-fascists. But in doing so did he opened the door to the charge that he and his administration are semi-socialist or even full socialist? His opponents argue that the 2020 election results were not a vote of confidence in favor of the transformational semi-socialist policies that the Biden administration wants to make. That according to his own words, the election would be a vote on a return to normalcy. Yet, some argue that his policies are taking the country in the socialist direction. But is that where the country wants to go? President Biden has been quoted as saying that his policies created the greatest job recovery in American history. … Since I’ve become president, we’ve created 8.7 million new jobs in 16 months. While the data he cites is correct, the key question to ask is a modified version of something that candidate Ronald Reagan asked in 1979. Are we better off than we were 2 years ago? Since President Biden takes credit for the recovery and the employment gains during his tenure, it seems fair to attribute the economic performance during the period to his policies. This allows us to credit his policies to the answer to the previous question. Again, using candidate Reagan approach, we focus on the Misery Index as a key indicator of economic wellbeing. The economy experienced a strong COVID recovery during 2021. However, since then, the economy has steadily slowed down posting two consecutive quarters of negative economic growth during the first half of 2022. The real GDP is averaging 2.15% annual growth rate during the Biden Presidency. The unemployment rate during the last two years declined and has declined and averaged 3.70% while the inflation rate has risen and averaged 6.17%. The Misery Index, the sum of the unemployment and inflation rate has averaged 9.93% during the Biden Presidency. But more alarming is the fact that the Misery Index has steadily risen pointing to a deterioration of the economic wellbeing. The S&P 500 surged during the first year , unfortunately during 2022, the 2021 gains have been erased. As of Labor Day 2022 the cumulative S&P 500 performance is slightly under water. Also during the Biden administration tenure the US productivity averaged -0.6% well below the 2.8% productivity increase during 2020. The decline in productivity helps explain the slow real GDP growth rate in spite of the large decline in the unemployment rate. And make us wonder whether the decline in productivity may be attributable to the quiet quitting that the government spending appears to have fostered. The November election will provide a signal as the direction the voters want him to take the country. But even if the voters disagree with his agenda, we fear and believe that the Biden administration will carry on. The performance of the Misery Index and the S&P 500 and the decline in productivity are not an endorsement of the policies of the Biden Administration. These numbers provide a clear answer to the question of whether we are better off.

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