Biden’s economic performance proved to be unbeatable | Remark


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U.S. financial markets outperform the world by the biggest margin in the 21st century, and for good reason: the U.S. economy has improved more in Joe Biden’s first 12 months than any president has in the past 50 years. , despite the contrary account of the media contributing to the gloom of public opinion. .

The exceptional returns on dollar-denominated assets, especially the S&P 500 Index, both in absolute terms and relative to its global peers, can be attributed to record debt ratios allowing companies to reap the highest margins. beneficiaries since 1950. US businesses are booming because the Biden administration’s Covid-19 vaccination programs and the $ 1.9 trillion US bailout reduced the unemployment rate to 4.2% in November compared to 6.2% in February, continuing an unprecedented rate of decline during the Covid-19 pandemic.

Consider that real, or inflation-adjusted, gross domestic product has jumped at an average annual rate of 5.03% in each of the first three quarters of 2021, and is expected to grow 5.6% for the year. based on the average estimate of more than 80 economists polled Bloomberg. If this forecast were to prove correct, it would be more than 2.8 times the average between 2000 and 2019 and double the average since 1976.

All of this makes Biden’s first year in the White House the star among the previous seven presidents, based on 10 market and economic indicators on a par. According to data compiled by Bloomberg, no one manages to match Biden’s combination of # 1 and # 2 rankings for each of the metrics:

Gross domestic product (1)

Company productivity (2)

Relative performance of the S&P 500 (2)

Per capita disposable income, which rose 1.08% this year, is Biden’s only comparable weakness, behind Donald Trump’s 2.17%, George W. Bush’s 2.01%, 1.80% of Jimmy Carter and 1.42% Ronald Reagan.

GDP growth in each incoming administration over the past four decades has never exceeded 2.74% until 2021. Biden is now able to overtake Carter (5.01%) as President’s GDP champion since 1976. Much of the credit goes to the US bailout, which has paid out $ 66 billion to 36 million households and reduced the child poverty rate by 50%, helping the US recover faster pandemic than most other countries.

Corporate America has never been healthier than under Biden in 2021. Efforts to support consumers have extended to U.S. businesses, which enjoy profit margins of around 15%, the largest since 1950, according to the Bureau of Economic Analysis. Non-financial profits rose 39.3%, making Biden the No.1 among eight presidents, with Obama far second at 21.6%.

Boom times have allowed companies to reduce net debt as a percentage of earnings before interest, taxes, depreciation and amortization to the lowest since data was compiled in 1990 for companies in the S&P 500. All of this helps explain why the stock market under Biden is just behind George HW Bush’s all-new president since Carter.

Americans are certainly feeling well. Consumer credit jumped $ 196 billion through October, a record under Biden that is 27% more than the increase under No.2 Donald Trump ($ 154 billion). While some of the gains reflect a rebound from 2020, when the pandemic pulled many consumers down, they wouldn’t add more debt if they didn’t feel confident.

In view of the improving labor market, it’s not hard to see why consumers are in such a good mood. Biden is the only president in the past half-century with robust increases in non-farm payrolls (4.3%) and manufacturing jobs (2.6%), approaching the gains Carter enjoyed in general employment (4.6%) and factory workers (3.9%). Trump, who inherited the longest expansion in modern times and said in 2015 he would be “the greatest job producer God ever created”, is also a candidate, with nonfarm and manufacturing payrolls. up 1.4% and 1.3%, according to data compiled by Bloomberg.

Businesses need all the workers they can get. The output of U.S. firms, a measure of productivity, rose 4.4%, putting Biden ahead of all of his predecessors except Carter, where he gained 6.25%. No wonder confidence among CEOs of America’s biggest companies has hit an all-time high this year as expectations for hiring, capital investment and sales have improved. The Business Roundtable CEO Economic Outlook Index, launched in 2004, rose 10 points to 124 in the fourth quarter, the highest in 20 years.

The US economy is the envy of the world, watching the forex market. The dollar has strengthened 7.37% this year. That’s the highest under a first-year president since the greenback gained 17.8% for Reagan, according to data compiled by Bloomberg.

Another sign that the US economy is a world leader under Biden, US stocks have outperformed the global stock market by 6.3 percentage points, the biggest advantage since 1988, when George HW Bush was in the White House, according to the reports. data compiled by Bloomberg.

The good period could extend to 2022. Biden’s bipartisan $ 1.2 trillion infrastructure investment and jobs law bodes well for America’s economy and labor, as it will rebuild deteriorating roads and bridges across the country and will fund climate and broadband initiatives that create jobs. Even Senate Minority Leader Mitch McConnell, who has said his priority is to prevent the Biden agenda, voted for the law along with 18 fellow Republicans.

Biden, like Carter, now faces the political fallout from accelerating inflation due to disruptions in the global supply chain associated with the pandemic, even as maintaining stable inflation and interest rates is the primary responsibility of the Federal Reserve, and the Fed has said it is ready to tighten monetary policy in 2022.

Biden, unlike Carter, benefits from the $ 29 trillion US debt market. Unlike the 1970s and early 1980s, confidence in the Fed’s ability to control inflation is intact, reflected in the benchmark 10-year Treasury bond yield fluctuating below 1.7% while inflation hovers at 4.1%. When Carter was in the White House, investors lost faith in the Fed, as evidenced by the 10-year yield hitting 12.6% and inflation hitting 9.65%.

The clear market message that tells all other markets what to do is that the people with the most stake are betting on Biden’s economy.

Matthew A. Winkler is co-founder of Bloomberg News and senior editor-in-chief. Bloomberg’s Shin Pei contributed to this report.

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