Despite the economic growth and job creation under President Biden, his unpopularity persists.

• The 46th president's legacy will be forever tainted by one problem, which appears to be a blemish on his otherwise impressive economic record as he leaves the presidency.
• Despite the positive aspects of Biden's presidency, the heavy toll of inflation on low-income households overshadowed all other achievements.
• Examining multiple data points provides insight into the narrative of inflation and its impact on the broader economic outlook.

Despite leaving the presidency, Joe Biden's economic record appears strong, with hiring continuing at a steady pace, GDP increasing, and consumers continuing to spend at a robust rate.

One issue will forever damage Biden's legacy, the one that led to his political downfall and will always be associated with him.

Despite the slowing of inflation from its peak in mid-2022, it remains a significant burden on households, particularly those with lower incomes. Consumers, investors, and business owners consistently name inflation as their top concern.

"Mark Zandi, chief economist at Moody's Analytics, stated that Biden inherited an economy that was struggling due to the pandemic and is now experiencing growth. However, many Americans still feel cheated and resentful."

Despite a decrease in the unemployment rate, 3% economic growth, and the admiration of the world's economy, the Biden economic story ends in disappointment as Trump returns to the White House on Monday.

"Joseph LaVorgna, chief U.S. economist at SMBC Nikko Securities and a senior economist in the first Trump administration, stated that the lasting legacy and differentiator between the two administrations is the two-and-a-half times higher inflation under President Biden compared to President Trump. This high inflation essentially led to the return to Trump's policy, which emphasized good growth and low and stable inflation."

Biden's presidency ends with a 36% overall approval rating, the lowest he has had, and only 33% of people approve of his handling of the economy, according to a CNN poll.

Examining multiple data points provides insight into the narrative of inflation and its impact on the broader economic outlook.

Biden by the numbers

During Trump's first term from 2017-21, the cumulative inflation rate was below 8%, as measured by the consumer price index. However, for Biden, it has been 21%. Despite the economy expanding in real terms by 11% under Biden compared to 8.6% under Trump, inflation has been a major concern. Inflation peaked above 9% in June 2022 and has stayed above the Federal Reserve's 2% target every month since March 2021.

Despite a 19% increase in average hourly earnings under Biden, wages have not kept up with the inflation rate due to rising prices of goods and services.

The University of Michigan sentiment survey shows that consumer confidence has decreased by 6% under Biden compared to when he took office, despite the fact that the economy was still recovering from Covid when he assumed office in January 2021.

Why are consumers feeling so blue?

Despite a 180% increase in egg prices over four years, consumers have continued spending, resulting in a 20% growth in retail sales and a 28% increase in household net worth, which now totals $169 trillion, according to Fed data.

The rise in stocks and real estate value have significantly impacted the household balance sheet.

The stock market has experienced significant growth since Biden took office, driven by advancements in AI technology. The Dow Jones Industrial Average has increased by over 40%, while the Nasdaq Composite, which is heavily influenced by Silicon Valley companies, has risen nearly 50%.

The Fed reports that home prices have increased by 24% and the value of real estate at the household level has risen by 42% during the same period.

The dream of owning a home has become increasingly difficult to achieve as mortgage rates have increased and borrowing costs have risen. Currently, the typical 30-year mortgage rate is over 7%, which is more than double the rate from January 2021.

The increase in wealth, particularly in the stock market, tends to favor those who can afford to purchase stocks.

The richest 1% holds the highest share of total net worth at 30.8%, according to Fed data. They also control just shy of 50% of all stock market-related wealth, a number that has gradually increased over the past few years. On the other hand, the lowest 50% of earners hold just 1% of stock market wealth, which has doubled during the Biden years.

The inflation question appears to be linked to all the different metrics.

A question of history

The issue of supply-demand imbalances, exacerbated by trillions in fiscal and monetary stimulus and slow-footed monetary responses, has driven up the costs for goods over services during the pandemic.

Biden launched a barrage of financial weapons at the post-Covid economy, including the $1.9 trillion American Rescue Plan and the 2022 Inflation Reduction Act, which sparked controversy among critics who claimed it exacerbated inflation, while supporters argued that the measures provided essential infrastructure and climate mitigation spending that would bring long-term benefits.

""At what cost have we experienced significant growth and a robust job market?" LaVorgna inquired."

Despite a 2-to-1 supply-demand mismatch, the labor market has been strong and has produced millions of jobs. The unemployment rate in the Biden economy has been cut by more than 2 percentage points and is currently stable, despite a brief increase in mid-2024.

Again, though, it all seems to come back to inflation.

The federal budget has become bloated, resulting in a $1.8 trillion deficit in 2024 and an expected deficit of more than $1 trillion in fiscal 2025. This is to finance a $36.2 trillion debt, with taxpayers shelling out more than $1 trillion in interest costs on the debt in 2020 and expected to pay some $1.2 trillion in 2021, which exceeds all other outlays except Social Security, defense, and healthcare.

Since the 2008 financial crisis, the U.S. has not experienced a 6% deficit to GDP ratio, which is typical in an expansionary economy, since the country was recovering from the World War II economy.

Future generations will inherit today's debt and deficits.

"That's a problem, a big problem," Zandi said.

Government and health care, as well as leisure and hospitality, have experienced significant job growth due to expansionary fiscal policy and the recovery of jobs lost during Covid.

Although there are numerous obstacles, many officials maintain that the U.S. economy is robust.

Zandi and Fed Chair Jerome Powell often receive inquiries about the "secret sauce" that has kept the U.S. thriving compared to other countries.

"At a December news conference, Powell stated that in international meetings he attends, the focus has been on how well the U.S. economy is performing. He noted that globally, there is slow growth and ongoing struggles with inflation. Despite these challenges, Powell expressed optimism about the economy's performance and expressed a desire to maintain this momentum."

The uncertainty about the direction of the Fed is a persistent cloud over the Trump economy.

The central bank raised its key borrowing rate by 5.25 percentage points during its inflation battle but has since lowered it by one point as officials become more confident about inflation's direction. Nevertheless, there is uncertainty about what will happen next, with markets predicting another quarter- or half-point cut for the rest of 2025.

As Biden departs from the presidency, numerous unanswered questions remain about how things could have been improved, and how they might have turned out even worse.

"Zandi stated that in 20 years, economists will view this period as an impressive achievement. However, the story is not yet complete, and history may judge this time as a precedent for future crises."