Fact-checking Biden and Trump's claims about the economy

Consumer sentiment about the state of the economy could be key in shaping the 2024 presidential election.

President Biden is still struggling How to address one of your biggest weaknessesInflation, which has eased recently, but soared in the first years of his term. Former President Donald J. Trump's persistent economic claims have been undermined by massive job losses and supply chain disruptions caused by the pandemic.

Here's a fact-check of some of his recent claims about the economy.

Both candidates misrepresented inflation.

What was said

“They had inflation — the real numbers, if you actually go into the real numbers, it's probably 40 percent or 50 percent when you add things up, when you don't just put in the numbers they want to hear.”
, Mr Trump at a campaign event in Detroit in June

“I think if you add everything up, when you start adding energy prices, when you start adding interest rates, it could be as high as 50 per cent.”
, Mr Trump said in an interview with Fox News in June

this is confusing. Trump campaign spokeswoman Caroline Levitt said, 41 percent increase Energy prices from January 2021, and prices for specific energy costs such as petrol During this period it increased by more than 50 percent.

But the most widely used measure of overall inflation, the consumer price index, has increased That's an increase of about 20 per cent since January 2021, less than half of Mr Trump's estimate. year by year Inflation reached an all-time high of 9.1 per cent in June 2022.

In comparison, under Mr. Trump, the index rose cumulatively by about 7.4 per cent from January 2017 to January 2021, and year-on-year inflation hit a high of 2.9 per cent in July 2018.

index This includes energy prices, but Mr Trump is correct that it has not included interest rates since the 1980s For various reasonsone of the 1982 paper Explaining why the CPI would take into account rental costs rather than mortgage rates, economists at the Bureau of Labor Statistics wrote that mortgages are partial investments for the future, while the inflation index should focus only on current consumption.

Harvard University economist Judd Cramer said that if interest rates were included in the CPI and given enough weight in the calculation, it is possible that the resulting index could rise by as much as 50 per cent during Mr. Biden’s term.

Dr. Kramer was the author of this A recently published working paper Which assessed the impact of including borrowing costs on CPI and its relation to consumer sentiment. According to the paper, taking into account housing costs and interest payments, annual inflation reached 18 percent in November 2022, while the official rate was 7.1 percent.

But Dr. Cramer rejected Mr. Trump’s statement that he described an index that incorporates interest rates as a more accurate measure of inflation or the “real” rate.

“Nobody can say that the real price of commodities fell 10 percent during the first Obama administration because mortgage rates went down,” he said, adding that mortgage rates affect only a small portion of Americans. “I don't think anybody thinks about it that way.”

“The point of our paper is that consumers are worried about interest rates, what they pay on their credit cards, what they have to pay if they want to buy a home, about car payments, so we should be thinking about these things,” Dr. Kramer said.

“But in terms of what the BLS is measuring, we think they're doing the right thing,” he said.

What was said

“I think inflation has gone up a bit. It was 9 percent when I came and now it's down to about 3 percent.”
— Mr Biden said in an interview with Yahoo Finance in May

false. When Mr. Biden took office in January 2021, the inflation rate was 1.4 percent. It peaked at 9.1 percent in June 2022, more than a year after he became president, and fell to 3.3 percent in May.

Mr Trump made false claims about jobs growth under Mr Biden.

What was said

“One hundred percent of the jobs created went to illegal workers.”
— Mr. Trump at the Detroit event

false. Official employment estimates do not support Mr. Trump’s statement. And estimates from various groups show that the population of unauthorized immigrants has grown in recent years, but not enough to take away all the jobs created during Mr. Biden’s presidency.

Two groups that advocate for lower levels of migration and stricter border security have estimated that 2.3 million To 2.5 million There will be more unauthorized immigrants in 2023 than in 2020. One group, the Center for Immigration Studies, estimated the total population at 12.8 million, while another, the Federation for American Immigration Reform, put the number at 16.8 million.

The economy has grown more than 15 million jobs since January 2021,

Ms. Levitt, a spokeswoman for the Trump campaign, said 414,000 foreign-born workers in Maycompared with the lack of 663,000 local workers Last month.

But monthly fluctuations don't tell the whole story. In April, for example, the number of foreign-born workers fell by 632,000 and the number of native workers increased by 866,000. Overall, the Bureau of Labor Statistics estimated There were 29.9 million foreign-born workers – both authorized and unauthorized – and 131.1 million native-born workers employed in 2023. This is an increase of 5.1 million in foreign-born workers and 8.1 million in native-born workers since then. 2020,

What was said

“Zero manufacturing jobs were created in March under Biden. You know that, right? Zero. I don't think that's ever happened. Zero. That's hard to do. Zero.”
— Mr. Trump at a May rally in Wisconsin

false. construction area A total of 6,000 jobs were lost from February to March, but Mr. Trump is wrong that this is unprecedented. Rather, since the Bureau of Labor Statistics began tracking monthly manufacturing employment in 1939, the sector has lost jobs in nearly 40 percent of the months.

During his own presidency, employment in the sector fell in seven of the 12 months in 2019, even before the coronavirus pandemic struck, and in the first four months of 2020.

Despite the decline in the total number of jobs in March 2024, the sector is still hired out 291,000 employees (335,000 in March quit his job,

What was said

“We have already created 15 million new jobs – a record.”
— Mr Biden said in a speech in June

This requires context. Growth in the economy 15.6 million jobs That's from January 2021, the month Mr Biden took office, through May. In raw terms, that's actually a bigger increase in new jobs in three years than the number added in the full four-year terms of all other presidents since at least 1945.

But in percentage terms, Mr. Biden’s first 40 months still lag behind job growth compared to the full terms of some of his recent predecessors. The economy has added 10.9 percent more jobs so far during Mr. Biden’s term, compared with 11.2 percent during President Ronald Reagan’s second term and 12.8 percent during President Jimmy Carter’s four-year term.

Mr Biden, of course, is comparing his three-and-a-half terms to the full terms or presidencies of his predecessors, so the comparison is not equal. In addition, the first years of Mr Biden's term saw historic job losses due to the coronavirus pandemic. Most importantly, The president is not solely responsible for the state of the economy,

What was said

“They want to quadruple your taxes.”
— Mr Trump at a rally in Las Vegas in June

“They'll let them expire. They'll give you the biggest tax increase ever, up to four times.”
, Mr Trump at a campaign event in Detroit in June

false. Many elements of the 2017 tax cut signed by Mr Trump will expire in 2025, and Mr Biden has proposed some tax increases on high-income people and corporations. But this is not the equivalent of a quadruple increase in taxes.

Tax deduction in 2017 Personal tax rates reducedIt raised the standard deduction and doubled the child tax credit, but it also limited the deduction for state and local taxes. The law is expected to go into effect in 2025. 1.4% reduction in average tax rateThe biggest change would be 2.4 percent for most of the top 5 percent of income earners, according to the Urban-Brookings Tax Policy Center, a Washington think tank that studies fiscal issues.

Ms. Levitt quoted Analysis by Tax FoundationThe conservative think tank has estimated that taxpayers would see an average increase of $2,800 if provisions of the 2017 law were not extended.

But Mr. Biden has also consistently said he does not support raising taxes on people making less than $400,000 a year. In his latest budget, the president said he does not support raising taxes on people making less than $400,000 a year. Proposed Extending the tax cut for those earning below this threshold. It called for “additional reforms to ensure that wealthy people and large companies pay their fair share”, such as restoring the top individual income rate to 39.5 percent from 37 percent for single filers earning over $400,000 and households earning over $450,000.

It also included several provisions that would reduce personal taxes for average and lower earners, including further expanding the child tax credit and making permanent the Earned Income Tax Credit for childless workers.

Mr. Biden's proposals would raise the average tax rate by about 1.9 percentage points, According to an analysis by the Tax Policy Center The budget is very similar to Mr Biden's budget from last year. The top 0.1 per cent will see the biggest increase of about 13.9 per cent, while lower-income taxpayers will see a reduction in taxes. This is nowhere near the 300 per cent increase warned by Mr Trump.

The Tax Foundation is also estimated Mr. Biden’s proposals would reduce after-tax incomes by about 1.1 percent across all income groups, and by 2.8 percent if the projected loss in economic growth is taken into account.

What was said

“He provided a $2 trillion tax cut for the super-rich that did nothing but increase the debt and had very little impact on ordinary people and their ability to work and grow.”
— Mr. Biden at a campaign event in June

This is an exaggeration. Most Americans, not just the highest income earners, Tax cuts received under 2017 law, despite assumptions to the contraryThe tax cuts increased the federal debt, but some studies showed that they boosted economic growth.

The 2017 law also expanded the child tax credit and simplified taxes by raising the standard deduction — arguably provisions that benefited ordinary people, Ms. Levitt said.

Independent Tax Policy Center estimated In 2018, 64.8 percent of people got a federal income tax cut, while 6.3 percent got a raise. About 81.7 percent of Americans making $50,000 to $75,000 — roughly an average income — received an average tax cut of $750. This Estimate From Joint Committee on Taxation, Congress' nonpartisan analyst.

However, higher earners fared much better under the tax cuts, with the top 1 percent receiving nearly 17 percent of the total benefits and the average tax cut being $30,000.

Multiple analyses Studies by nonpartisan, left-wing and conservative think tanks about the 2017 law have shown that it led to modest near-term growth in GDP, though economists disagree on the long-term effects. One recent study also found that the 2017 law Investment was encouraged and workers' wages were marginally increasedAlthough other studies have found nothing like this There will be no impact on the wages of the workers.