America’s strong economy: The next president will have a lot to work with

We are very pleased to say the American economy is doing quite well. In the third quarter of 2024, the nation’s GDP — that’s the value of all the goods and services it produces minus the value of the goods and services used in production — grew by 2.8%, a very healthy rate, so says the Bureau of Economic Analysis, a unit of the U.S. Commerce Department that serves as “an independent, principal federal statistical agency that promotes a better understanding of the U.S. economy by providing timely, relevant, and accurate economic accounts data in an objective and cost-effective manner.”

These are excellent findings, including that inflation is low, and should make all Americans happy. However, the professionals who produce these numbers are not rooting for the incumbent Democrats to keep control of the Senate or that the ruling Republicans maintain their House majority and they are not trying to help Kamala Harris and Democrats hold the White House over Donald Trump and the GOP.

But the “in” crowd holding public office does benefit in elections when the economic tide is rising, just they are punished when times are bad.

Tomorrow morning at 8:30, another set of nonpartisan career civil servants, at the Bureau of Labor Statistics (an agency of the U.S. Department of Labor) will publish the national employment stats for the month of October.

We used to joke when asked who would win a presidential election, to first tell us the unemployment rate first; low employment helps incumbents and a high jobless rate causes people to lose elections. We will find out next week how that old model holds up.

As for side-by-side comparing on GDP, annualized growth was at or below 2.8% for 10 out of the 16 quarters Trump was president. That included the sluggish fourth quarter of 2018, which saw just 0.7% growth, and the slower-going fourth quarter of 2019 — before COVID hit — which registered just 1.8% growth. It also included the terrible pandemic in Q1 and Q2 of 2020, when the economy contracted by 4.6% and 29.9%, respectively. 

Put another way, besides two Trump quarters in which the economy tanked, two quarters in which the economy grew by more than 4% — and one gangbusters quarter in which the country emerged from illness — economic growth in the 2017-2020 the Trump-Pence years generally kicked around 2-3%. That’s right around the same output Joe Biden and Harris have delivered. As they say, six of one, half a dozen of the other.

There are many other ways to measure an economy. Inflation painfully got the better of many paychecks from early in the Biden-Harris years through 2023 and Harris herself says that the price of groceries are too high. But at the same time, those years have seen better stock-market performance; more robust job growth; better wage growth; and lower unemployment. Who you side with on the economy may be more a matter of who you like.

Still, no economic indicators are pure products of presidential leadership. It’s the Federal Reserve that taps or slams the gas or the brakes through monetary policy, feeding or containing growth and inflation. Fed Chair Jay Powell has been at the helm for seven years, serving during both the Trump and Biden administrations. Powell and his colleagues have successfully brought down inflation while preventing a recession. But they aren’t on the ballot, Trump and Harris are.

When Americans go to the polls up until Tuesday, they will render their verdict.