You may have heard: Joe Biden is becoming the next Jimmy Carter.
As Democratic president in the 1970s, Carter had to deal with runaway inflation, as Biden is doing now. Carter has also faced an energy crisis, sparked overseas, just as Biden is now trying to tackle soaring gas prices caused by Russia’s invasion of Ukraine. Carter claimed the nation is facing a “crisis of confidence,” which is arguably also the case under Biden, given that consumer confidence by some measures is at all-time lows.
Republicans, of course, hope there is another similarity between Jimmy Carter and Joe Biden. Carter was a one-term president who lost his 1980 re-election bid in a landslide victory for Ronald Reagan. Republicans controlled the White House for the next 12 years. It’s not yet clear whether Biden will run for re-election in 2024, but Democrats look set to be beaten in this year’s midterm elections.
As part of the Yahoo Finance Bidenomics Report Card, we compare Biden’s performance on the economy with past presidents, going back to Carter. We track six economic indicators, with data provided by Moody’s Analytics, and compare Biden to his predecessors at the same point in their presidencies. So we have the data in hand to directly compare the Biden and Carter economies to each president’s 17th month in office.
So far, it’s a tie, with the Biden economy doing better on three measures and the Carter economy doing better on the other three. Many Americans remember the Carter years as a dark time characterized by high inflation. But that didn’t really happen until late in Carter’s presidency, including a seven-month recession that began in January 1980. During Carter’s first two years in the late 1970s, the economy was doing well. good.
The economy was also strong during Biden’s first year, in part due to lucky timing. Biden took office in 2021 as the recovery from the COVID recession was just beginning, and COVID vaccines were finally allowing parts of the economy to slowly return to normal. There was also an extraordinary amount of fiscal and monetary stimulus that shortened the recession and accelerated the recovery.
The five charts below show how the two presidents compare on total employment and manufacturing employment growth, plus GDP growth, stock market performance and average hourly earnings. (Click on the arrows in the upper left corner to move through the graphs.)
Biden has the edge on total job gains, and in fact he leads all presidents on this metric, due to the rapid post-COVID recovery. Carter is second among eight presidents, indicating the strength of the economy early in his career. We do not adjust this measure for population growth, which makes the job gains early in Carter’s presidency all the more impressive.
Carter is winning on manufacturing job gains, with Biden second among all presidents. This reflects the larger share of the workforce employed in manufacturing jobs in the 1970s. Manufacturing work has gradually declined in terms of share since then, as the U.S. economy shifted towards services .
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Biden has a slight advantage over Carter on GDP growth, which we adjust for population growth. Again, Biden and Carter are one and two among the eight presidents, another reflection of the strong economies they both oversaw early in their terms.
Both are mediocre when it comes to the performance of the S&P 500 stock index. Biden ranks 4th, Carter 6th. Barack Obama had the best stock performance after 17 months, again largely due to timing. Obama took office near the end of a stock market slump, with stocks bottoming and beginning a record tear in Obama’s second month. Biden ranked second in stock returns until last December, when stocks peaked and were about to enter the bear market they still find themselves in.
Biden ranks worst in terms of average hourly earnings, while Carter ranks second. Our Bidenomics Report Card does not directly measure inflation, but we adjust incomes for inflation, to measure the “real” income gains that determine Americans’ purchasing power. Inflation has eroded income gains under Biden, which is why he comes in last. Solid real income gains under Carter were yet another measure of a strong economy at the time.
As for inflation itself, it was 7.4% in Jimmy Carter’s 17th month, compared to 8.6% at the same time of Biden’s presidency. Advantage Carter, yielding our tie 3-3.
The direction of the economy is something that matters a lot, and of course, we don’t know where it’s headed for the rest of Biden’s presidency. But the direction of the economy makes clear why Carter lost massively in 1980 and why many Americans view his tenure as a failed presidency.
Carter’s economy remained strong until his third year in office, when growth began to decline and inflation began to soar. Inflation peaked at 14.6% in April 1980 and GDP declined in the second and third quarters of the same year. Layoffs increased and the economy lost jobs from March to July. Things improved slightly at the time of the November elections, but not enough to make a difference. There is literally no worse time for a president to encounter a recession than six months before he asks voters to re-elect him.
Under Biden, Americans clearly feel things are getting worse, not better, and the data backs it up. Inflation has steadily worsened over the past year, and gasoline prices, now near $5 a gallon, are at all-time highs, unadjusted for inflation. GDP growth is slowing after a hefty 5.7% gain in 2021. Job growth is still strong, but the Federal Reserve’s aggressive interest rate hikes also mean curbing it, as a way to cool economy and control inflation.
None of this, however, means that Biden is destined to suffer the same fate as Carter and end his presidency trying to explain away a recession. The Fed’s inflation-fighting plan could work, slowing the economy just enough to lower prices while maintaining growth. A significant drop in inflation should delight consumers. Biden still has two years before he or a successor needs to convince voters they need to stick to the Democratic economic plan and give Democrats another four years in the White House. It is entirely possible, meanwhile, that there will be a resolution in the Russian-Ukrainian war, the most important way to drive down oil and gas prices. Maybe down.
Even if there is a recession, it could be brief enough to stifle the economy, break inflation, and leave the country healthy by 2024. We can tell this by looking not at the Carter presidency but at that of his successor, Ronald Reagan, who was trying to lead the nation through another recession in his 17th month, June 1982.
Of the eight presidents in our report card, Reagan ranks last in GDP growth and stock market returns at this point in his presidency, and not much better in the other categories. But the Fed managed to bring inflation down and the recession ended in Reagan’s 23rd month. A powerful rally ensued and Reagan won re-election in 1984 by an even bigger margin than he had beaten Carter in 1980. This is the bull case for Biden.
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