Yahoo Finance One underappreciated Biden accomplishment: No recession
By the time President Joe Biden’s four-year term ends next January, it’s increasingly likely he’ll be able to say, "No recession happened on my watch."
The last recession was the deep but short COVID downturn that ran from February to April of 2020, during Donald Trump’s fourth year as president. The economy has mostly expanded since, and economists think that is likely to continue. The Bloomberg consensus outlook is a 30% chance of recession during the next 12 months, which is the lowest level in two years. At this time in 2023, the outlook was a 65% chance of recession within 12 months.
Most presidents have to deal with a recession, especially if they serve two terms. If Biden makes it to January without a downturn, he’ll be the first recession-free first-term president since Bill Clinton in the 1990s.
Recessions, of course, can derail a president — but timing is everything. The Trump recession in 2020 contributed to his loss to Biden that year. The recession was technically over well before Election Day, but the damage took years to heal. Employment, for instance, didn’t return to pre-COVID levels until 2023.
Barack Obama had a recession during his first year in office, in 2009. But that began during the financial crash under his predecessor, George W. Bush, and was over by Obama’s fourth month in office. The expansion that followed was slow but steady, continuing until the COVID crash in 2020.
Bush, for his part, endured a relatively short eight-month recession that started two months after he took office in 2001 and was part of the dot-com crash. That was largely forgotten, however, by the time Bush ran for reelection in 2004 and won easily.
Bill Clinton won the White House in 1992 amid the hangover from another eight-month recession that hit during George H. W. Bush’s single term. That recession ended more than a year before the 1992 election, yet the slow recovery helped the newcomer from Arkansas beat the entrenched incumbent.
Ronald Reagan faced a rough 16-month recession that started in 1981, his first year in office. But the recovery that followed was quick and robust and the economy boomed during the remainder of Reagan’s eight years. The Reagan recession was actually part two of a double dip, with the first dip occurring during Jimmy Carter’s last year in office, sinking his 1980 reelection bid.
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It’s a mantra of this column that presidents get far more credit or blame for the economy than they deserve because they don’t really have that much control over it. If they did, every president would push the buttons labeled "expansion" and none of them would ever induce a recession.
But the reality of politics is that voters hold the president responsible for whatever happens on his or her (well, his) watch. That makes recessions one of the top determinants of who remains or becomes president.
Read more: How much control does the president have over the Fed and interest rates?
In Biden’s case, he regularly takes credit for what’s going right in the economy, which is unprecedented job growth, record-high stock prices, and an enduring expansion that has defied many recession predictions. It’s probably fair to say the stimulus and infrastructure bills Biden signed in 2021 gave a tailwind to an economy that was already growing. But innovative entrepreneurs, spendy consumers, and efficient businesses are the real sources of the economy’s strength.
Besides, it’s well known by now that a resilient economy isn’t enough for Biden because inflation ravaged consumers' purchasing power during his second and third years in office. Inflation is heading back toward normal levels, but voters are still pissed, and they blame Biden for the elevated cost of food, rent, and transportation.
Polls show Biden trailing Trump in this year’s presidential contest. If the 81-year-old Biden ignores growing concerns about his age and stays in the race, he could be the first president in modern times to lose reelection without a recession striking during his term. Lyndon Johnson might have suffered the same ignominious fate in 1968, except he pulled out of the race amid rancor over the Vietnam War. The Democrats’ replacement nominee, Hubert Humphrey, did lose to Richard Nixon that year, so voters bounced the incumbent party even though there was no recession from 1961 to 1969.
Biden’s poor standing with voters obviously speaks to his weakness as a candidate, but there’s no rule that says voters have to dislike the economy as much as they dislike the president. Whatever it means for Biden, the solid economy, including the normalization of inflation, is basically good for everybody. Voters can choose to politicize the economy, but they’re also free to simply enjoy the good times while they’re here.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman.
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