By Jeffrey Sonnenfeld and Stephen Henriques- This week President Joe Biden welcomed President-elect Donald Trump back to his old home at the White House. This magnanimous act runs in stark contrast to the cold reception Trump gave Biden in 2020 when the roles were reversed, breaking with the tradition of an amicable—not to mention peaceful—transfer of power.
Biden’s White House welcome to Trump versus Trump’s snub of Biden four years ago is matched by lack of reciprocity in the economy each gifted the other. Then-President-elect Biden inherited an economy from President Trump in shambles with the greatest economic collapse in the post-World War II era due to COVID-19.
However, by, contrast, President-elect Trump is receiving the strongest economy in modern history which is the envy of the world. Despite understandable concerns about post-Covid inflation, prices continue to fall as wages rise. President Trump will likely claim he waved a magic wand on January 20 and the economic clouds cleared since he declared, in error, during the debate with Biden, “I had no inflation, virtually no inflation. [Biden-Harris] had the highest inflation perhaps in the history of our country because I’ve never seen a worse period of time…People can’t go out and buy cereal or bacon or eggs or anything else. The people of our country are absolutely dying with what [Biden and Harris have] done. They’ve destroyed the economy.”
The Biden economy, at its worst in fighting post-Covid supply chain snags, was not even one third of the worst inflation the U.S. has battled. But the Biden Administration worked to fight inflation by resolving the surge of a reopened economy with over 100 ships backed up in the Los Angeles harbor waiting a month to unload cargo in 2021 with parallel conditions in harbors, railroads, and airports around the nation.
Only housing costs were out of reach due to a misguided, but independent, Federal Reserve with excessive rate hikes. The Federal Reserve’s overkill of 11 rate hikes in 14 months, from 0 to 5.5 %, kept people from putting their homes on the market due to soaring mortgages.
Many Americans are still surprised to learn that the U.S. economy has seen unrivaled growth under the Biden Administration. Both the World Bank and the International Monetary Fund have had to increase their growth estimates for the American economy, surprised by its resilience and superiority over every developed country. Unemployment is at record lows. Nearly one million manufacturing jobs have been added. Financial markets have notched 80 record highs. Oil and natural gas production is higher than ever before, and nearly one-third higher than Saudi Arabia and Russia.
Between the Bipartisan Infrastructure Act, the Inflation Reduction Act, and the CHIPS Act, Biden’s legislative legacy is poised to create millions of new jobs in the years ahead, on top of the 16 million net new jobs already created, in stark contrast to the net loss of over 2.7 million jobs during Trump’s presidency.
The elephant in the room is supposed to be inflation. Wage growth has now outpaced inflation for 18 consecutive months. American paychecks are expected to recover from the inflation erosion of the pandemic by June. Workers in industries as far ranging as dockworkers, aerospace, automotive, and trucking enjoyed pay and benefits increases of 50% to 100% with assistance from the Biden Administration. For comparison, the U.S. never fully recovered from the last time inflation ran rampant—in the 1970s. The Biden Administration will have done it in two years.
Meanwhile, government measures have recorded the steady decline in prices since inflation peaked in 2022 with this week’s Consumer Price Index confirming inflation on target at the normal expected 2.6%. and producer prices up only a negligible 0.3%. But CPI, PCE, and other metrics only convolute what people really experience throughout their daily lives. Americans are savvy, as are corporations operating in a hyper-competitive capitalist system. Consumers will shop where they can find the lowest prices.
Groceries, for instance, were recently projected by the Bureau of Labor Statistics to be growing at annual rate of 1.1%. However, Walmart, Target, Amazon (via Amazon Fresh and Whole Foods), Kroger, Walgreens, and Aldi have slashed prices on tens of thousands of goods by 10-30% in most cases.
Many have even doubled down amid competition for consumers. Target cut prices on another 2,000 goods ahead of the holiday season and promises 2,000 more before the end of the year. Walmart launched a new private label brand, called “bettergoods,” which offers 70% of daily goods for less than $5.
The cost of milk, meat, bread, beverages, fresh fruit and vegetables, diapers, paper towels, toilet paper, and much more have notably fallen as a result. Consumers have taken notice, too. Walmart and Target have seen heightened demand for their goods because of price rollbacks and expect demand to continue into the future.
CEOs of both companies have assured investors that the cheaper prices will not hurt their profit margins. Input prices are coming down because Biden has successfully led the U.S. economy through unprecedented supply chain disruptions, the primary cause of the historic price inflation. Credit should also be given to those business leaders who are passing savings to consumers, not just their shareholders.
Government measures will not immediately reflect the falling prices from Walmart, Amazon, Target, and the others because of the way in which their data is collected. There is a natural lag effect as other grocers and retailers will soon lower their prices to compete. A similar pattern is occurring throughout the economy in other goods and services. As markets normalize to the lower price environment, government data will show inflation defeated, and politicians will declare victory and, most importantly, claim credit.
President-elect Trump will likely attempt to claim credit as wages continue to recover from pandemic-led inflation and as the prices of everyday goods continue to fall. He will attribute credit to his “America First” agenda, aggressive tariff policy, and self-ascribed supernatural market powers. However, let’s register the history right now for accuracy. There is no question as to whom that credit should go: President Biden and his administration.
President Harry S. Truman once advised: “It is amazing what you can accomplish if you do not care who gets the credit.” President Trump will offer a 21st century modification to that wisdom. (TIME)
