The Commerce Department announced on Wednesday that the U.S. economy expanded at an annual rate of 2.8% in the third quarter. A day earlier, the Conference Board reported the biggest increase in consumer confidence in three years Those are just the latest in a string of good reports that underscored our position as the world’s most successful country. And by most measures, that is even more true under President Biden than it was under Donald Trump.
Start with the gross domestic product, the broadest measure of economic success. Until the late 1990s, the American economy expanded at a rate not that dissimilar from other major developed countries, including Europe and Japan. But since then, the fortunes of those countries have diverged dramatically. Importantly, note that our economy has also grown faster under Biden than it did under Trump. (This is true whether the impact of Covid is included or excluded.) Finally, just last week, the International Monetary Fund issued a new forecast that projected that this divergence in growth rates will continue.
That is equally dramatic on a per capita basis, which can serve as a proxy for incomes. On an inflation adjusted basis, this measure has more than doubled in the U.S., far outstripping in both rate of growth and absolute level what has occurred in other major countries.
Then there’s inflation. Yes, the U.S. had a spike in inflation after Covid struck. But so did Europe and the U.K. Indeed, our jump in inflation was smaller than theirs. And now the inflation rate in all of these countries has fallen to close to the Federal Reserve’s target of 2%, without engendering the recession that many feared.
While inflation may be similar between us and Europe, because of the far slower growth in Europe, the unemployment rate there remains almost double ours. Even in Germany, the unemployment rate is 6% and in other major European countries, it is higher.
Part of what is fueling the current surge of growth in the U.S. has been investment. That in turn has been driven by our remarkable success in technology, our move to energy independence, which has brought with it low-cost natural gas and more recently, the passage of several important pieces of legislation during the Biden Administration: the Bipartisan Infrastructure Law, the CHIPS Act, and the Inflation Reduction Act. All told, investment has increased at a 9.4% annual rate under Biden, compared to a 3.9% rate under Trump.
Finally, there’s the stock market, which has been on a tear, up 22% this year alone and outperforming other major markets. Once again, Biden has bested Trump, with a 51% increase in share prices compared to 44% for Trump over a similar period.
