If Donald Trump wins next week’s election, it would be the first time in US history that a candidate wins based on such a huge lie – his falsehood that we have “the worst economy ever”. The former president’s big lie has distorted the views of millions of Americans, wrongly convincing many that the US economy is in bad shape.
There’s no denying that many Americans are struggling economically and that inflation was painfully high back in 2022, but inflation is far lower now, and most economists agree that our economy is strong. The unemployment rate is low, inflation is way down, economic growth is solid, and job growth has been remarkably strong. Indeed, the country has added nearly 18m jobs – a record – under the Biden-Harris administration. Not only that, median household income has climbed to $80,610, higher than it was in Trump’s last year in office.
“In the 35 years I’ve been an economist, I’ve rarely seen an economy performing as well as it is,” Mark Zandi, chief economist of Moody’s Analytics, said recently. “I’d give it an A+.” But the US public, still upset about the surge in inflation several years ago, sees things very differently: 62% say the economy is in bad shape, while just 38% say it’s in good shape, according to an October AP-NORC poll.
The public holds this negative view even though there’s been very good news for blue-collar workers: the US has added more than 700,000 factory jobs under the Biden-Harris administration, far more than during Trump’s presidency, indeed more than under any president since the 1970s. There’s also been good news for small businesses – a record 19m new business applications have been filed under Biden. There’s also good news for the wealthy – the stock market has climbed to record levels, which is Wall Street’s way of saying the economy is in excellent shape. Let’s not forget that Trump warned that if Biden was elected president, the stock market would crash. Wrong again, Donald. Under Biden, the Dow Jones Industrial Average is 36% higher than when Trump left office, and the S&P 500 is 53% higher.
Trump’s repeated claim that today’s economy is the worst ever shows either an appalling ignorance of history or an appalling contempt for the truth. The truth is that the economy was in far worse shape during Trump’s last year in office, when the unemployment rate soared to 14.8% during the pandemic, compared with 4.1% now. Moreover, there were many other times when the economy was in worse shape – it was worse during the 2008 recession under George W Bush, far worse during the 1980-81 and 1974-75 recessions, and catastrophically worse during the Great Depression of the 1930s. When Trump tells his Maga crowds that today’s economy is the worst ever, he’s taking everyone for an idiot.
The US economy has grown the fastest among major industrial nations since the pandemic began. Our economy has grown twice as fast as Canada’s, three times as fast as France’s and Japan’s, and four times as fast as Britain’s. Under Biden, the average unemployment rate has been lower than under any president since Lyndon Johnson.
If Harris loses to Trump, historians and economists will long debate why she lost while Ronald Reagan was re-elected in a landslide in 1984 even though unemployment was far higher back then (7.2% versus 4.1% today), inflation was higher (4% versus 2.4% today), and the Federal Reserve’s interest rates were far higher (10% versus 5% today). One thing working for Reagan was that GDP growth was strong in 1984.
Don’t get me wrong, today’s economy has serious problems. Millions of Americans are struggling, but it’s wrong to blame Biden and Harris for that. I’ve been writing about America’s workers and economy for more than 40 years – from Reagan to Clinton to Trump to Biden – and under every president, millions of American have struggled economically. Trump makes believe that far more Americans are struggling now than ever before, but that’s just not true. Take this important statistic: 11.1% of Americans currently fall below the poverty line. That’s essentially the same percentage as under Trump and is only slightly above its lowest point in half a century.
Many Americans say the economy is in poor shape mainly because of their lingering dismay about the high inflation from mid-2021 to mid-2023. But they may not know that wages have risen faster than inflation over the past two years and that real wages are higher than before the pandemic. Trump blames Biden and Harris for causing inflation, but they weren’t the cause. The two main causes were the pandemic’s closing factories and disrupting supply chains worldwide and Russia’s war against Ukraine, which increased energy and food prices. Americans complain that gas prices are higher, but that’s Vladimir Putin’s and Opec’s fault, not Biden’s or Harris’s. US oil production has hit record levels.
Housing affordability remains a big problem. Not only have housing prices soared, but high interest rates – which are finally coming down – have made it far too difficult for many Americans to buy a house. Again, the housing squeeze is not Biden’s or Harris’s fault; it was caused by a huge slowdown in housing production that began during the 2008 recession.
It’s unfortunate that Trump’s dishonesty and deceit too often make us focus on his lies rather on something far more important: the future, and what a second Trump term would mean for the country. Many economists warn of disaster if Trump wins. They warn that his plan to impose tariffs or taxes on all imported goods will send inflation soaring and ignite a dangerous trade war that could cause a recession and throw millions out of work. Economists also warn that Trump’s plans, including his plan to slash taxes on the wealthy and corporations, not only will increase the federal debt by a colossal $7.8tn, but could bankrupt the social security system and lead to a 33% across-the-board cut in social security benefits.
No wonder 23 Nobel Prize-winning economists signed a recent letter calling Trump’s economic agenda “counterproductive” and warning that it “will lead to higher prices, larger deficits, and greater inequality”.
In contrast to Trump, Kamala Harris has specific plans to improve the economy and help Americans cope with high prices. She has pledged to build 3m new housing units to help bring down housing prices. She also plans to give $25,000 in down payment assistance to first-time homebuyers. To help with the high cost of raising a family, she has called for creating a $3,600 tax credit per child and $6,000 for newborns. Recognizing how expensive caregiving needs can be, she wants to create a trailblazing Medicare at Home program to help pay for care for ageing parents.
Nobel-winning economists said Harris’s economic agenda is “vastly superior” to Trump’s and “will improve our nation’s” employment opportunities, health, investment and fairness.
American voters have a clear choice. They can choose Harris’s agenda, which promises a stronger, fairer economy, or Trump’s agenda, which will bring a worse, less stable economy with higher prices and less fairness.
Unlike Trump, I’ll be honest and won’t claim that his economic agenda will bring the worst economy ever, even though his agenda looks plenty dangerous.