The Biden administration has witnessed a tumultuous yet dynamic economic landscape, marked by significant growth and prosperity alongside stark challenges. The share of total net worth held by the richest 1% reached 30.8%—its highest in about three years—while the lowest 50% of earners have seen their stock market wealth double, albeit still holding just 1%. Retail sales soared over 20%, and household net worth climbed to $169 trillion, reflecting a 28% increase since the end of 2020. However, the economic expansion is not without its pitfalls. The government's deficit-to-GDP ratio sits at an unprecedented 6% during an expansionary period, and inflation remains persistently above the Federal Reserve's 2% target, despite aggressive rate hikes.
The Federal Reserve's battle against inflation saw its key borrowing rate rise by 5.25 percentage points. However, as inflation trends stabilize, the central bank has eased rates by a full point. Meanwhile, mortgage rates have skyrocketed, with the typical 30-year rate now over 7%, more than double where it stood in January 2021. Despite these challenges, the labor market remains robust, producing millions of jobs and dramatically lowering the unemployment rate since President Biden took office. Under Biden, the economy has expanded in real terms by 11%, outpacing the 8.6% growth under former President Trump.
"To me, that is the lasting legacy and differentiator between the two administrations," – Joseph LaVorgna, chief U.S. economist at SMBC Nikko Securities and a senior economist in the first Trump administration.
Much of this job growth has been concentrated in government and health care sectors—both beneficiaries of expansionary fiscal policy—as well as in leisure and hospitality. Yet, while these figures paint a picture of economic vigor, they are underscored by complex financial strains. The cumulative inflation rate during Trump's first term (2017-2021) remained below 8%, as per the consumer price index. In stark contrast, trillions in fiscal and monetary stimulus during the pandemic era exacerbated supply-demand imbalances, leading to sharp inflationary pressures.
"Biden inherited an economy that was flat on its back because of the pandemic, and he's bequeathing an economy that's flying high," – Mark Zandi, chief economist at Moody's Analytics.
The federal deficit hit $1.8 trillion in 2024 and appears poised to exceed that mark in fiscal 2025 as it finances a burgeoning $36.2 trillion debt. Taxpayers faced over $1 trillion in interest costs last year alone, with projections indicating a rise to approximately $1.2 trillion this year—surpassing all government outlays except Social Security, defense, and healthcare.
"Having said that, there are blemishes in the minds of many Americans… They feel ripped off." – Mark Zandi, chief economist at Moody's Analytics.
Despite these financial burdens, economists recognize the remarkable achievements under Biden's tenure. Retail sales have experienced a substantial upswing, while household wealth has surged significantly. Nonetheless, economic disparities remain prominent. The wealthiest 1% continue to command a significant proportion of total net worth, raising concerns about inequality.
"Economists looking at this 20 years from now are going to view this as quite an amazing performance," – Mark Zandi, chief economist at Moody's Analytics.
Inflation remains a persistent concern for policymakers and citizens alike. It peaked above 9% in June 2022 and has consistently exceeded the Federal Reserve's target since March 2021. While the central bank has taken steps to address this issue through aggressive rate hikes, the journey towards stable inflation levels continues.
"That's a problem, a big problem," – Mark Zandi, chief economist at Moody's Analytics.