Also, economic growth during a president’s time in office is a flawed measure of economic impact. There’s the already-discussed role of luck, the built-in limitations of GDP and similar measures in reflecting how economic rewards are shared and whether they’re sustainable, and the simple fact that policy choices under one president can affect growth well after that president leaves the White House. I can’t adjust for all of those things, but I can at least use several different ways of measuring growth to make clear that no single number is right. Contrasting GDP with the average of GDP and GDI is one approach. Another is to time-shift, starting measurement from the quarter before a president takes office or the quarter after.
For presidents who served two full terms, these shifts don’t change the picture much. For those with very short tenures, such as Gerald Ford and Biden so far, the differences in growth rates can be large — although however you slice it growth so far under Biden remains the fastest since Clinton.
Population growth is an important factor affecting economic growth that, while not entirely outside of a president’s control, seems determined mainly by other forces. Adjust for that by looking at per-capita economic growth, and the picture changes yet again.
This seems quite unfair to Dwight Eisenhower, given that the rapid population growth during his presidency consisted almost entirely of babies who weren’t really in a position yet to contribute much to the economy. But it puts more recent presidents’ economic performance in a justifiably more favorable light. And whaddya know: by this measure, growth under Biden is the fastest since the presidency of Lyndon Johnson.
Again, I wouldn’t make too much of that! But it’s so different from current public perceptions of the economy that it’s worth pausing to understand why that might be.
Consumer prices have risen at a faster pace so far in the Biden presidency than under any president since Jimmy Carter. People really hate inflation. Until it slows, Biden won’t be getting a lot of credit for the pace of economic growth — and bringing it down may require slowing that growth pace even more.
Justin Fox is a Bloomberg Opinion columnist covering business. A former editorial director of Harvard Business Review, he has written for Time, Fortune and American Banker. He is author of The Myth of the Rational Market.
