My Buddies, They Wrote Me A Letter

The Biden-Harris administration has made much of a letter signed by 16 Nobel prize-winning economists in late June "warning that the U.S. and world economy will suffer" if President Trump wins another term in the White House (Reuters). The letter says that the economic agenda of President Biden is "vastly superior" to that of President Trump. It goes on to say that Trump's plan to impose tariffs on China again would cause rampant inflation, leading to higher prices on imported goods. "We believe that a second Trump term would have a negative impact on the U.S.'s economic standing in the world, and a destabilizing effect on the U.S.'s domestic economy.," the letter stated.

President Biden referred to the letter during the disastrous debate performance that ultimately led to his ouster from his re-election campaign by the Democrat Party machine, and it was a topic he brought up during several of his subsequent rare public appearances. No doubt Vice-President Harris will make it a part of her campaign repertoire, assuming the Party machine allows her to remain the presumptive nominee.

I'm going to debunk that letter in this post. I'll start with facts and data - something those 16 Nobel laureates curiously left out of their letter - then I'll discredit the signatories to the letter itself, for they are not impartial, and they violated a couple of the cardinal rules of economics in writing the letter.

***************

Let's start by looking at Trump's economic agenda, then we'll contrast that with the agenda we could likely expect from a President Harris, which we can assume would be pretty close to that of President Biden, although Harris has yet to articulate an economic agenda of her own.

The beauty of the task set before me is that I have history on my side: Donald Trump has already been President for one term. And his economic agenda for the next term is really little different than it was for his first term: cut taxes and regulations, adopt an all-of-the-above energy policy to make America energy dominant, and yes, impose tariffs on those countries that engage in unfair trade practices with the U.S., especially those who impose tariffs on our goods and services.

Trump did all of that during his first term, so we have a rich data set by which to measure the results. We can see whether economic growth resulted, and we can see whether those policies ignited inflation, or hurt America's economic standing at home or abroad. I will present data to support my conclusions, unlike the Nobel laureates who penned the letter back in June.

One caveat is that Trump's economic record was interrupted by the economic shutdown that was implemented in response to covid, which caused an outsized, anomalous recession. However, it was very brief, and the recovery was rapid and robust. So we will look at President Trump's economic record both before and after the shutdown.

Taxes

In 2017, the Trump administration put forth the largest overhaul of the U.S. tax code in three decades. The legislation, known as the Tax Cuts and Jobs Act (TCJA), took effect on January 1, 2018. Its primary features were as follows:

• Cut the corporate tax rate from 35% - which in 2016 was third-highest in the world - to 21%.
• Cut the top individual tax rate from 39.6% to 37%; the 33% bracket to 32%; the 28% bracket to 24%; the 25% bracket to 22%; and the 15% bracket to 12%. The 35% and 10% brackets remained unchanged.
• Raised the standard deduction for single filers and married couples filing jointly significantly, eliminating the need for many itemized deductions.
• Suspended the personal exemption.
• Ended the individual mandate under the Affordable Care Act, which imposed penalties on those who did not purchase health insurance under the Act.
• Increased the Child Tax Credit and created a credit for non-child dependents, with income qualifications.
• Raised the estate tax exemption.
• Limited the mortgage interest deduction to $750,000 of debt vs. $1,000,000 previously.
• Suspended some miscellaneous itemized deductions.
• Capped the deduction for state and local taxes.

(Note that the Act was widely criticized for cutting the top bracket rate by more than the next two brackets. However, those in the top bracket tend to be business owners who create jobs, vs. the next two brackets who include more individuals who are merely wealthy earners, which was the rationale for the relative magnitude of the cuts for the top three brackets.)

To measure the effectiveness of the TCJA, we should look at three things:

1. Labor market metrics - as the name implies, the Act was intended to spur job growth. (We'll look at this only up to the covid shutdown; job recovery after the shutdown was largely a function of re-opening the economy.)
2. Economic growth, as measured by GDP growth.
3. Stock market performance - cutting corporate tax rates would benefit publicly-traded companies, and if their stock values increase, the wealth of Americans would also increase; not only wealthy investors but teachers, nurses, union members, and others whose retirement savings are invested in mutual funds, exchange-traded funds, and pension funds, the largest holders of U.S. equities in the world.

Under the Obama-Biden administration, nonfarm payroll growth averaged 121,000 jobs per month. However, during the early months of the administration, payrolls were still declining sharply due to the Great Recession of 2008-09, so let's just look at President Obama's second term. During that time, payroll growth averaged 216,000 per month.

In 2017, prior to the effective date of the TCJA, payroll growth averaged 171,000 per month. From the effective date of the Act to the covid shutdown, payroll growth averaged 184,000 per month.

Thus it's inconclusive whether the TCJA resulted in greater job creation. However, there are a lot more variables involved in job creation than just taxes. Also, payroll growth was gaining momentum in late 2019 and early 2020, averaging more than 200,000 per month, so assuming there would be some lag between the effects of lower taxes and job creation, it could be argued that the TCJA had some effect. Note also that job recovery and growth from the Great Recession had matured, and we were approaching full employment. At that point in an economic cycle, job growth always slows. So we need to also look at the unemployment rate.

The jobless rate under the Obama-Biden administration was similarly skewed by the early months, when unemployment was still very high due to the Great Recession, so again let's just look at the second term. During that time, the unemployment rate averaged 5.8%.

In 2017, prior to the TCJA, it averaged 4.3%. (To be fair to Obama, it had been declining throughout his second term - and there's that evidence that we were reaching or had reached full employment, which Obama's Fed Chair, Janet Yellen, had defined as 5%. This explains why job growth was slowing.) 

From the effective date of the TCJA until the month prior to the covid shutdown, the jobless rate averaged 3.8%, reaching 3.5% in February 2020 - which at the time was the lowest rate since 1969. Also, unemployment among minorities was at record-low levels. Jobless claims were also at levels not seen since the 1960s.

As for GDP growth, during the second Obama-Biden term, it averaged 2.48%. For 2017, it was 2.96%. From the beginning of 2018 up to the covid shutdown, it averaged 2.63%. So again, an inconclusive result; but again, there are more moving parts at play than just taxes. (And, I should note, some of the rapid and strong recovery from the covid shutdown, both in employment and in output, undoubtedly owes to the favorable tax environment.)

Finally, let's look at stock market performance, specifically, the S&P 500 Index. It's hard to place much weight on market performance during President Obama's term, because the market was still being supported by the Fed's Quantitative Easing program through 2014, halfway through his second term. However, the average annual gain in the S&P during that term was a little under 13%.

In 2017, it was 18.6%. From the TCJA effective date until just before the covid shutdown, it averaged 9.75% per year. Again, this is inconclusive, and again, there is much more to stock market performance than taxes (in fact, taxes play a much smaller role than other factors, including regulations). However, it's noteworthy that in early 2020, just before the covid shutdown, the S&P 500 hit an all-time record. Also, despite a 19% decline in March 2020, when the economy was shut down, the S&P eclipsed that record in August, just five months after the shutdown, and had reached a new record by the time President Trump left office. The index returned 16.3% overall for 2020, in spite of the shutdown, and arguably some of that was the result of a favorable tax environment.

Perhaps the best measure of the effects of the TCJA is to answer the question Ronald Reagan posed in his campaign for President in 1980: "Are you better off today than you were four years ago?" In economic terms, very few Americans could honestly answer that question "no" in October 2020. Virtually all of us were paying less in taxes. Our investment portfolios were doing better. There were more jobs, and unemployment was lower, at least until covid hit. Even after covid, taxes were lower and investment returns were higher, and output growth had recovered to 99% of its pre-covid level.

It's harder to measure the effect of cutting regulations, so I'm not going to address that here, other than discussing energy policy below. Suffice it to say that cutting regulations benefits businesses, which is good for job growth, stock market performance (again, benefitting both large investors and small retirement savers), and economic growth and competitiveness. One example of cutting regulatory red tape under the Trump administration was Operation Warp Speed, which got the covid vaccine developed, approved, to market, and ready for global distribution in well under a year. This enabled the Biden administration to be ready to respond to covid (although they initially fumbled the distribution plan), and it's responsible for much of the economic growth of 2021, as it allowed more sectors of the economy to re-open. After 2021, the economy began to contract.

Energy

There are also a lot of moving parts to energy prices. However, prior to the Trump presidency, America was heavily dependent on foreign oil. We saw the disastrous effects of that during the Carter years. And while the Obama-Biden and, to an even greater extent, the Biden-Harris administrations have attempted to push the nation toward "green" energy, there are a multitude of problems with attempting to make those sources our primary sources of energy today.

First, the world still runs on oil. Attempting to change that overnight, rather than gradually, is a fool's errand. Second, the infrastructure does not exist today for green energy to be a primary energy source. We don't have the electrical grid to support widespread ownership and operation of EVs. There aren't nearly enough charging stations, and the Biden-Harris administration's $7 billion investment in building 500,000 charging stations within eight years has only resulted in 12 new stations in two years. Third, EV technology is expensive, and it can't scale fast enough to become affordable. Fourth, EV technology isn't sufficient for most Americans' needs. EVs' limited range won't accommodate most Americans' travel preferences, and there are risks in the event of evacuating from events like hurricanes, operating them in severe winter weather, etc. And finally, green energy isn't that green. The fossil fuels required to produce an EV battery or a wind turbine are greater than the carbon footprint savings, and disposing of them creates more environmental harm than the benefits they provide.

President Trump immediately adopted an all-of-the-above energy policy upon taking office in 2017. I'm not going to look at energy prices post-covid, because a lot of the downward pressure on prices after the pandemic resulted from a severe decline in demand, as air and cruise travel were decimated and there were a lot fewer Americans on the road. (I know - I went on a driving vacation in June 2020, and it was pretty much just us and the tractor-trailers.)

West Texas crude oil prices only fell by about $1.60/barrel from February 2017 to February 2020, but part of that was because we were drilling a lot more oil and selling it abroad. Gas prices from the time President Trump took office until the covid shutdown averaged $2.58/gallon, vs. more than $3/gallon for the seven years prior (discounting the first year of the Obama-Biden term due to the dampened demand from the Great Recession).

(I'm getting ahead of myself, but gas prices under the Biden-Harris administration have averaged about $3.50/gallon.)

From 2017 to 2020, the U.S. was the #1 oil producing country in the world, higher than Saudi Arabia or Russia. We were still the top producer of oil in 2023, but our production had fallen 32% from 2020, and Russia had surpassed Saudi Arabia. We were energy independent when President Trump left office, and moving toward energy dominance. Our Strategic Petroleum Reserve was 638M barrels at the end of 2020. Again, I'm getting ahead of myself, but today, it's less than 367M barrels, down more than 42%. We are no longer energy independent.

Tariffs

This is the hot button, the item that the Nobel laureates claim will cause inflation to spike. Let's look at the record, because Trump imposed tariffs in his first term.

In January 2018, President Trump imposed tariffs on solar panels and washing machines. The tariffs were steep - 30-50%. In March, he imposed tariffs on steel and aluminum imports from most countries, ranging from 10-25%. The administration also increased tariffs on Chinese imports.

Some trade partners implemented retaliatory tariffs, including Canada, India, and China. The Trump administration responded by using the Commodity Credit Corporation to provide aid to U.S. farmers. The administration threatened additional tariffs on Mexican imports to stem the tide of illegal immigrants, but those tariffs were averted through negotiations. (It worked, as Mexico cooperated in stopping immigrants at its border through the Remain in Mexico agreement, and illegal immigration fell by 50% as a result. We know what's happened since - and what the results have been. An estimated 50% of job growth today is due to illegal immigration, at the expense of U.S. workers.)

In December 2019, the U.S. and China suspended a portion of their tariffs, then a month later signed a trade agreement that resulted in the tariffs being further reduced in February and March, 2020.

So, did the tariffs cause inflation from 2018 to 2020? Again, we'll exclude the post-covid time period, since reduced demand and opportunity to spend during and after the shutdown dampened prices.

The month after Trump took office, CPI year-over-year was 2.8%. In February 2020, just before the covid shutdown and when the tariffs had largely been suspended and/or reduced, CPI was 2.3%. The highest annual rate of inflation during the time the tariffs were in place was 2.9%, one-tenth of a percentage point higher than when Trump took office. The lowest rate was 1.5%, in January and February 2019, when the trade war was at its peak - roughly half the rate of inflation when Trump took office, and nearly a percentage point lower than when the tariffs were put in place.

Clearly, the tariffs did not cause an inflationary spike. Further, GDP grew, unemployment fell, the stock market rose, and illegal immigration declined.

Conclusion

It's inconclusive whether Trump's tax policy created jobs, increased output growth, or increased stock market returns, but there are many variables involved in those measures of economic performance. We do know that jobs grew, unemployment fell, GDP rose, and the stock market reached record levels during his term, in spite of the covid shutdown. We also know that Americans' after-tax incomes were higher.

It's clear that his energy policy reduced gas prices and made America energy independent. And it's unequivocally clear that his tariffs did not result in higher inflation. Trump's policies certainly didn't have an adverse impact on America's economic standing in the world, nor did they destabilize the domestic economy (unless you want to count the decision to shut down the economy in response to covid, but we can largely thank Fauci and Birx for that, and besides, his policies brought the economy back to near-full recovery before he left office, as I outlined in my most recent post).

Now, let's turn our attention to what we might expect from a Harris economic agenda. As noted, we really know nothing at this point about what her plans would be, assuming the party machine even allows her to remain the presumptive nominee. Only the polling results will tell.

We do know that she has been in lockstep, to a degree, with President Biden's policies over the last three and a half years. We also know from past statements that she is even more opposed to fracking and more committed to green energy than her boss has been. So about the only thing we can conclude is that we'd be looking at four more years of Bidenomics, but possibly with a booster shot.

So what have we experienced as a result of Bidenomics in terms of the measures above? Well, we've had job growth, but as I've written extensively, that's still just job recovery from the covid shutdown, because we're still about four million jobs short of where we'd be in terms of normal growth had the economy not been shut down in the first place. And as noted, it's been aided and abetted by illegal immigration.

We do know with certainty that taxes would go up, because most of the provisions of the TCJA are scheduled to expire at the end of 2025, including the cuts to the corporate tax rate and the individual brackets, as well as the increase in the standard deduction and the elimination of the personal exemption. So, unless Congress and the new President take action to make those cuts permanent next year, the 2026 tax brackets will revert to their pre-2018 levels.

That means a tax increase for nearly every American, and a return to a corporate tax rate that is among the highest in the world, which would almost certainly result in a sharp correction in the stock market, hurting small and large investors alike. If you're a teacher or a nurse or a truck driver, your retirement savings will take a hit - and so will your take-home pay.

President Trump has vowed to fight to make those tax cuts permanent. In fact, he wants to cut the corporate tax rate further, to as low as 15%, and to eliminate income taxes on tips.

(As an aside, there is a meme floating around social media claiming that this plan is intended to allow lawyers and hedge fund managers to get their large bonuses re-classified as tips so that they're not taxable. America, how ignorant are you? This would be a blatant violation of wage and hour laws. It simply can't happen. Wise up.)

On the other hand, Congressional Democrats are determined to allow the TCJA to expire as planned, and President Biden has said he would veto any legislative effort to make it permanent. We can only assume a President Harris would do the same.

Under President Biden, GDP slipped into negative territory in the first two quarters of 2022, and the 2024 Q1 reading was below 1.5%. The advance release for 2024 Q2 was better, at 2.8%, but is expected to be the highest level of the year (and note that the advance release for Q1 was revised downward in the later releases). Clearly, we're tilting toward recession. Maybe the Powell Fed can engineer a soft landing in the event of a Harris victory, but otherwise, a recession appears inevitable. Trump's agenda is pro-growth, pro-business, and pro-jobs, providing a better chance of a return to growth without relying on monetary accommodation that could result in another bubble.

I already noted what's happened to gas prices under President Biden, and that would be likely to continue with Harris' staunch opposition to fracking and commitment to green energy. We'd likely see a doubling-down of the commitment to phase out gas vehicles and force Americans into EVs. A recent study of EV owners found that nearly half of U.S. EV owners plan to switch back to gas vehicles with their next auto purchase - assuming they can. Ford missed its Q2 earnings estimate by a significant margin due to massive losses on EVs, so corporate America will suffer if the EV-only push continues. China will prosper, and Americans will continue to drive their used gas-powered cars.

We've also seen a huge spike in inflation under the Biden-Harris administration: prices are up about 20% since they took office, even though the rate of inflation is down from the peak of 9% year-over-year in mid-2022. What's worse is that they don't seem to understand what inflation is; as the rate of inflation has fallen, they insist that prices are down. They're not. They continue to rise, but at a lower rate than two years ago (but still at a higher rate than under the previous administration, tariffs and all).

Now that we've thoroughly debunked the letter penned by these 16 Nobel laureates, I'm going to discredit them.

First, let's address the Nobel prize itself. Several noted economists - Franco Modigliani, Merton Miller, Harry Markowitz, William Sharpe, and Eugene Fama - were awarded the Nobel Prize for their work in various market pricing theories. I've studied this work extensively, and much of it is solid. However, a good portion of their work - especially that of Fama - is based on the Efficient Market Hypothesis (EMH), the notion that markets are efficient. I won't go into EMH in detail, but suffice it to say that it's wrong.

Markets aren't efficient. I knew it intuitively when I studied Fama et al during my Chartered Financial Analyst (CFA) studies, and based on my own research. But smarter people than I have debunked Fama's work, and have themselves received the Nobel prize for doing so (Robert Shiller and Richard Thaler). These aren't the only instances of Nobel prizes having been awarded for work that was subsequently proven wrong. Science and literature provide other examples. But Fama didn't have to surrender his Nobel prize.

And let's not forget that the Nobel Peace Prize was awarded to a freshman President whose only contribution to global peace at the time was a world tour during which he apologized to foreign leaders for America being ... America.

But as far as these 16 Nobel laureates who wrote the letter in June regarding Trump's agenda vs. Biden's, they broke two cardinal rules of economics. First, they didn't use data to support their conclusions, as I've attempted to do above. They easily could have, and probably more eloquently than I, though they'd have had to have reached a quite different conclusion than they did, because the data contradicts their assertion.

Second, and more important, they did not adhere to the requirement of political agnosticism in forming an economic opinion or forecast. You see, eight of those 16 economists have made financial contributions to the Democrat Party, and four of them contributed directly to President Biden's campaign. (Not one of them has contributed to the Republican Party, or to President Trump.)

In other words, they're biased.

Sure, I have my political opinions, and I vote, as I assume every economist does. I did note above where the data was inconclusive. And I've criticized Trump for caving to Fauci and Birx and allowing the economy to be shut down. But I go where the data leads me. And I've never donated money to a political party or candidate.

This was a curated, hand-selected list of economists, recruited by the Biden-Harris campaign to pen this letter, without a shred of credible evidence or data to support it. It's no different than the curated lists of pre-screened reporters who are given pre-selected questions to ask in advance of the rare press appearances President Biden has made over the past four years.

So there isn't an ounce of credibility in this letter. We need only to look at the records of these two Presidents over the single term each of them served, and extrapolate it over the next four years (assuming the proxy of one of them continues his policies).

One would bring economic growth, lower unemployment across a broad socio-economic spectrum, lower taxes, low inflation, low energy costs, energy independence and/or dominance, and increased overall financial and retirement security.

One would bring economic stagnation (because output growth is slowing), increasing unemployment (because job growth is slowing and unemployment and jobless claims are rising), higher taxes beginning at least in 2026, higher energy costs and continued energy dependence (including on our enemies), and reduced prosperity.

The choice is yours.

The Truth, The Whole Truth, And Nothing But The Truth

Another election season is upon us, and so it's time for the Curmudgeon to get back in the saddle once again. But this post won't be about politics - at least, not overtly so. True to his roots, the Curmudgeon will take on economic data in this post, setting the record straight, as is his wont. For there's been a lot of misinformation as of late, and the record needs setting straight. As always, we will use hard data to do that.

It's been an interesting three or four weeks, to say the least. First, we had the disastrous debate performance by President Joe Biden, leaving us to wonder just why he insisted on debating his opponent in the first place. That led to a growing chorus of voices calling on him to step aside and let another candidate take his place at the top of the Democrat ticket, as his poll numbers, already flagging, slipped further.

Then, we had the Supreme Court immunity decision that effectively ended much of the lawfare waged against former President Trump, adding to the momentum of his campaign. Less than two weeks later, a would-be assassin's bullet grazed the former President's ear, coming within inches of ending his life, and leaving many questions regarding the Secret Service's security protocols - questions that remain unanswered more than a week later, despite a Congressional committee hearing for which the Director of the Secret Service had to be subpoenaed to appear, only to resign in disgrace a day later.

The following week brought the Republican National Convention, and the announcement of Ohio Senator J.D. Vance as Trump's running mate. These events further solidified the Trump campaign's momentum, and intensified calls for President Biden to step down. In the midst of the RNC, and just two days after the assassination attempt, a Federal judge threw out the classified documents case against Trump, arguing that the Special Prosecutor in that case - who would also preside over other lawfare cases against Trump - was unconstitutionally appointed. Further momentum for Trump.

Finally, three days after the RNC, and just over three weeks after the fateful debate, President Biden announced that he would not seek re-election - ironically forced out of the campaign by the Democrat Party machine that made him the 2020 nominee after forcing then-frontrunner Bernie Sanders aside, and for the same reason: the party machine determined that its frontrunner could not defeat Donald Trump, the will of the voters be damned.

Now, you might say, what does all of this have to do with economics, EC? It's sounding a lot like politics to me. Well, dear reader, read on. This is merely the backdrop. The misinformation, and the economic data that will disprove it, is forthcoming.

***************

The Misinformation

The initial misinformation came during the debate itself, when President Biden claimed that he inherited an economy that was on the brink of disaster following the covid pandemic, and that he brought America out of the pandemic.

But the catalyst for this post came in the aftermath of President Biden's announcement of his "withdrawal" from the campaign.

A teary-eyed Rachel Maddow - purveyor of more conspiracy theories and misinformation than the Kremlin itself - proclaimed that Biden had brought America from the dark depths of the economic disaster wrought by covid, implying that he took office at the nadir of the pandemic's economic malaise, and lifted the U.S. economy to recovery.

Well, as Col. Sherman T. Potter would say, "Horse-hockey."

Let's look at the data by sector. But before we do, I will, in the spirit of political agnosticism that any economist worth his or her salt should embrace when discussing economics, place blame for the covid shutdown at the feet of President Trump. He allowed Fauci, Birx, et. al. to convince him to allow the states to shut down their economies, the most disastrous policy decision in the history of disastrous policy decisions, a wholly unnecessary move that accomplished nothing in the way of public health but did nearly irreparable harm to the global economy, a move whose repercussions are still being seen in the economic data today. (To be fair, it was a decision - we now know - based on bad science, or no science, from the man who claimed he was science itself.)

There is a constitutional argument to be made that the decision to shut down economies was rightfully a states' rights decision. I would argue that given the gravity of the repercussions, for the good of the Republic, the federal response should have superseded states' rights at the time, something that Fauci, Birx et. al. themselves argued in trying to shut down ALL states. Trump and Pence unwisely followed their bad advice, permitting the calamitous "Two weeks to flatten the curve" lie, which turned into nearly two months, with disastrous results.

As a reminder, covid hit the U.S. in March 2020. The U.S. economy was shut down from mid-March through April, and re-opened in early May. Donald Trump was President at that time. Joe Biden was not even the presumptive Democrat nominee until Sanders was officially pushed out of the race on April 8, and he didn't secure enough delegates to become the nominee until June 5, having finished lower than third in the Iowa caucus and New Hampshire primary. So he had nothing to do with the economy from the time it re-opened in May 2020 until after his inauguration in January 2021.

On to the data.

Employment

As I've noted before, the covid shutdown eliminated nearly 22 million U.S. jobs. Every job gained since then has been recovered, not "job growth." (All 22 million jobs were recovered by June 2022, but that doesn't account for the normal growth that would have occurred had the economy not been shut down; it was growing by about 200k jobs/month prior to the shutdown, with no indication of slowing. Had growth continued at that pace, we'd still be about 4 million jobs ahead of where we are today.)

In the nine months from when the economy re-opened in May 2020 until the end of President Trump's term, about 12.5 million jobs were recovered, or about 57% of the jobs eliminated - and that includes the 243,000 jobs lost in December 2020, when California and New York shut down their economies for a second time. So President Trump got payrolls 57% of the way back to where they'd been before the shutdown.

How long did it take for President Biden's administration to oversee the recovery of the remaining 43% of jobs eliminated? Seventeen months, about twice as long as it took President Trump's administration to get us 57% of the way there. And how long did it take for the Biden administration to oversee the recovery of 12.5 million jobs, a feat the Trump administration achieved in just nine months? Three times as long - 27 months.

Let's look at another employment measure: the unemployment rate. President Biden likes to boast that the unemployment rate today is the lowest in U.S. history. (It's not - at 4.1%, it's not even the lowest in his term; that number is 3.4%, recorded in January and April of 2023. It's risen steadily this year.) But the lowest unemployment rate in U.S. history is 2.5%.

Moving on to the covid recovery numbers: in February 2020, just prior to the pandemic, the unemployment rate was 3.5% and trending lower; it had dropped from 4.0% at the beginning of 2019. (It averaged 7.4% under the Obama-Biden administration, and was 4.7% when Trump took office.) In April 2020, it peaked at a record 14.8% due to the shutdown.

By the time Trump left office, the unemployment rate had dropped to 6.4% - a decline of more than eight percentage points, and lower than the average under his predecessor.

How many percentage points has it declined under President Biden?

Just over two. Three, if you count the lowest point during his term. Again, Trump got us 77% of the way back to where we are now, in just. nine. months.

GDP

From the time he took office until the quarter before the pandemic, GDP growth under President Trump averaged 2.8%. (Under the Obama-Biden administration, it averaged less than 2.2%.) In the first quarter of 2020, which included the normal months of January and (mostly) February, but also the partial shutdown month of March, GDP contracted by 5.5%. In the second quarter, which included the full shutdown month of April (note that some large states like California and New York as well as smaller states like Hawaii and New Mexico remained shut down longer), GDP declined by a record 31.6%.

In the third quarter, with the economy fully open, GDP grew by a record 31%. And in the fourth quarter, it grew by more than 4%.

So President Biden inherited an economy that had already recovered, and was growing at an above-trend pace. And that continued through 2021 (thanks again to Trump - we'll get to that). But by 2022, GDP contracted again, for two consecutive quarters, the textbook definition of a recession (although the administration claimed that the definition had changed). No recession would have occurred under Trump had covid not hit. Yet it took the Biden administration only a year to turn a fully recovered, growing economy into a contracting one.

GDP growth under President Biden has averaged 2.7%, less than under President Trump prior to the covid shutdown (after having inherited the anemic growth of the Obama-Biden era). 2024 Q1 growth was just 1.4%, and Q2 growth is expected to be below 2% again, which will bring the Biden average even lower.

CPI

Now, this is a tricky one. Although President Biden claims he inherited 9% inflation when he took office, he didn't. (For the record, I don't believe he's intentionally lying when he says that. I think he just doesn't have a clue.) He inherited 1.4% inflation, as measured by year-over-year CPI. He created 9% inflation, which was the level of CPI just 15 months after he took office - the highest level since I was in college, and I just qualified for Medicare a few months ago. But let's get back to current inflation in a minute.

The 1.4% inflation that President Biden inherited was attributable largely to the fact that consumption plummeted during the covid shutdown - not so much because people couldn't afford to buy stuff. Sure, those 22 million people whose jobs were destroyed couldn't buy much during the period of time they were out of work. But the jobs came back pretty quickly, and there were trillions of dollars of stimulus payments in the interim.

However, most of the people who lost their jobs were at the "bottom" of the economy. I wrote extensively at the time about how it was a "bottom-up" recession, and predicted - correctly, I might boast - that that was the reason the recovery would be very rapid, and very strong. The people at the "top" of the economy - the highest wage earners - didn't lose their jobs. And many of them received stimulus payments they didn't need, because the income bar the government set for the stimulus payments was set so high.

So those people's incomes weren't affected; in fact, in some cases they were augmented by stimulus - but they still couldn't buy stuff, or travel. Why? Because the stores were closed, the airplanes were grounded, the cruise ships weren't allowed to take passengers, and the hotels were closed, and then re-opened at limited capacity. Some states imposed draconian quarantine requirements - Hawaii even encouraged residents to rat out visitors who violated them, and provided a hotline for them to use, so that the police could round them up. Shades of 1930s Germany or Stalinist Russia.

In any event, when the economy did re-open, and travel resumed, consumption did, also. But remember that CPI is typically measured year-over-year. So consumption in January 2021, when President Biden was inaugurated, was still only up 1.4% over January 2020, when the economy was roaring along under President Trump. In January 2021, cruising was still not allowed, strict quarantine and vaccine requirements were still in place for travel abroad, masks were required on airplanes, some states still had those draconian quarantine requirements in place, and some airlines were still limiting seats - and nearly all airlines had cut routes. There were also lingering supply chain issues that prevented some goods from getting to market.

The point of all of this is that I can't give President Trump too much credit for the low inflation that persisted post-pandemic, when it averaged just 1.1%. So let's look at his record pre-covid: CPI averaged 1.9% during that time. Under President Biden, it's averaged 5.4% - the highest average under any President since Jimmy Carter.

Now, President Biden also likes to say that prices have come down recently. That's also false, and probably just speaks to the fact that he doesn't understand inflation. The rate of inflation has come down, from the 9% peak in June 2022 to the most recent reading of 3.3%. But that still means that prices are up 3.3% vs. a year ago. And that 3.3% increase in prices vs. 2023 is on top of 2023's 4.9% increase, over 2022's 9% increase over 2021 ... get the picture? Prices under Joe Biden are up 20% in total, and his term isn't even over yet (technically). Prices under President Trump only rose 3.9% - and even without the dampening effects of covid, they were only on pace to rise 7.6%.

Interest Rates

As a result of the disastrous policies that led to rampant inflation under President Biden, the Fed has had to tighten interest rates aggressively. (What does this have to do with recovering from covid, you ask? Well, the catalyst for the runaway inflation that was launched in 2021 - and the thing that President Biden claims saved us from covid - was the massive, and wholly unnecessary, stimulus/spending bill he signed immediately after he took office.)

The rate on a 30-year fixed-rate mortgage, as of this writing, is 6.85%, according to Bankrate.com. When President Trump left office, it was 2.65% - a record low. On the average mortgage amount of $330,000, that's a difference in the monthly principal and interest payment of $832 - in other words, your mortgage payment on that median-priced home would have increased by 63%. (And mortgage rates actually peaked at more than 7.8% last October - again, under President Biden.)

Interest rates on everything else are up too, from auto loans to credit cards. And credit card balances are at record levels, because more and more consumers are having to borrow to pay for everyday needs, thanks to prices being 20% higher than they were less than four years ago.

Housing

Finally, let's look at the effect those higher mortgage rates have had on home prices. Home prices in virtually every market in the U.S. have been rising year-over-year, and in many markets, they're at record levels. That's good news if you're a homeowner looking to sell. The problem is that no one can afford to buy.

Prices are rising, because there's no inventory, because no one is selling, because they don't want to buy another home at these mortgage rates. (If you still have a mortgage today, chances are your rate is under 4%.) The only homes being bought are new construction, and new construction is priced on a cost-plus basis.

The most widely-followed national home price index, the S&P/Case-Shiller Index, which tracks 20 major metropolitan markets, is up 7.2% vs. a year ago, and that's unsustainable. Home prices simply shouldn't rise much more than the rate of inflation, since they don't throw off cash flows, unless you're in a market where buildable land is scarce and demand is high. Home prices are up 33% since President Biden took office. And rent inflation is up more than 21% under his presidency, vs. less than 14% under President Trump.

The Vaccine

This one's a little controversial, because many people who support Trump believe the vaccine kills people (which is curious, since Trump is the President responsible for fast-tracking the vaccine and getting it to the market in the first place), while those who oppose him embrace the vaccine - also curious, since the new Democrat nominee (for now), Kamala Harris, once said she wouldn't take the vaccine because it was "Trump's vaccine," and therefore dangerous. But the purpose of this post is not to discuss the merits or conspiracy theories surrounding the vaccine.

President Trump cut through the red tape of the bloated FDA to rush the vaccine into production - remember Operation Warp Speed? Do you think President Biden could have gotten a new vaccine, in response to a previously unheard of virus, into production, approved, to market, and ready for distribution globally in ten months? Heck, he took $7 billion of our money to build 500,000 EV charging stations two years ago, and to date has built twelve. He took another $7 billion to expand internet access to rural areas, and to date ... nothing has happened on that front.

In spite of Vice President Harris' reluctance to take the "Trump Vaccine" in late 2020, immediately after the election she and President Biden rolled up their sleeves and accepted the gift that President Trump made available for them. Then they followed his administration's distribution plan (and even managed to screw that up), and even went so far as to try to mandate the very vaccine that she had urged Americans not to get because it was "Trump's."

Well, she and her boss took credit for it. But it was indeed Trump's vaccine, and he's the one that made it available, which was a big part of the reason for the strength of the recovery in 2021, President Biden's first year in office, because more and more swaths of the economy re-opened on the basis on widespread vaccine availability and adoption.

Conclusion

In summary, Donald Trump - not Joe Biden - engineered the recovery from covid. Let's recap:

• Under President Trump 57% of the jobs destroyed by the shutdown were recovered, with 12.5 million jobs brought back in nine months. It took President Biden three times that long to "add" 12.5 million jobs.
• Under President Trump, unemployment fell eight percentage points from the pandemic peak - again, in nine months. Under President Biden, it's fallen by two percentage points in nearly four years.
• Under President Trump, GDP growth went from -32% to 31% in one quarter, then continued to grow through the end of his term. Total GDP at the end of 2019, the quarter before the pandemic began, was $20.95 trillion. By the time Trump left office, it was about $20.8 trillion. So economic growth had 99% recovered when President Trump left office. A year later, the economy was contracting, and today, GDP growth is less than 1.5%.
• What growth there was in 2021 was due to the widespread availability of the covid vaccine, leading to more and more segments of the economy re-opening. That vaccine was fast-tracked by President Trump.

The only economic contributions that the Biden-Harris team have made on their own have been rampant inflation, soaring interest rates, and unaffordable housing costs.

Do we really want four more years of this - and from the undercard, no less?

Okay, so maybe this was political. But, you know what? It's political to say you inherited 9% inflation, when you didn't inherit it, you created it. It's political to say you brought the economy back from covid when you know you didn't - and it's political for your propaganda mouthpiece, who knows better, to repeat the same lie. And it's political to say that your predecessor did nothing about covid, when his response was swift, effective, and strong - something that can't be said about anything you've done for the last three-plus painful, embarrassing years.

So, you've got to fight fire with fire. You've got to fight lies with the truth. And ...

The numbers never lie.