Biden says U.S. economy is world’s best. Trump calls it a ‘cesspool.’ Data is clear.

President

Joe
Biden
is
fighting
to
convince
inflation-weary
voters
that
the
U.S.
economy
is
healthy.

“America
has
the
best
economy
in
the
world,”
he

told
NBC’s
“TODAY”
on
Monday,
laying
out
an
argument
that
is
central
to
his
reelection
campaign.

America’s
economic
standing
in
the
world
is
becoming
an
early
flashpoint
on
the
campaign
trail,
where
former
President

Donald
Trump
routinely
depicts
the
United
States
as
a
commercial
wasteland.

“We
are
a
nation
whose
economy
is
collapsing
into
a
cesspool
of
ruin,
whose
supply
chain
is
broken,
whose
stores
are
not
stocked,
whose
deliveries
are
not
coming,”
Trump
shouted
at
a
Georgia
rally
last
month.

But
the
numbers
paint
a
different
picture,
one
more
in
line
with
Biden’s
narrative
of
American
economic
dominance
than
Trump’s
apocalyptic
warnings.

Inflation
has
fallen
sharply
from
its
2022
highs,
although
it
has
ticked
back
up
in
the
past
several
months.

“On
inflation,
it
is
too
soon
to
say
whether
the
recent
readings
represent
more
than
just
a
bump,”
Federal
Reserve
Chair

Jerome
Powell
said
Wednesday.

Meanwhile,
U.S.
gross
domestic
product
grew
2.5%
in
2023,
significantly
outpacing
that
of
other
developed
economies,
according
to
a
January
report
from
the

International
Monetary
Fund.
The
IMF
projected
that
the
U.S.
will
hold
that
lead
in
2024,
though
it
expects
the
rate
to
come
down
to
2.1%.

Two
other
large
advanced
economies,
Canada
and
Germany,
lagged
with 2023
GDP
growth at
1.1%
and
negative
0.3%,
respectively.

“The
U.S.
economy
is
leading
the
way
for
the
global
economy.
It’s
driving
the
global
economic
train,”
Moody’s
chief
economist
Mark
Zandi
told
CNBC. 

As
economists
watch
U.S.
inflation’s
wobbly
descent,
the
numbers
still
remain
hot
in
developed
economies
worldwide.
In Canada,
for
example,
the
consumer
price
index
rose
3.9%
in 2023 while
in Germany,
the
inflation
rate
was
5.9%.

Countries
calculate
inflation
differently,
which
makes
direct
comparisons
difficult.

But
Zandi
said
that
even
adjusting
for
the
calculation
discrepancies,
the
U.S.
still
looks
good
on
the
inflation
front.

“Using
the
same
methodology
as
let’s
say
the
European
Union,
the
Fed’s
already
at
target,
inflation
is
already
below
2%,”
he
said.

And
even
as
interest
rates
spiked,
the
labor
market
has
stayed
strong.
In
March,
U.S.
private
companies
added

184,000
jobs,
payrolls
processing
firm
ADP reported
on
Wednesday,
well
ahead
of
the
Dow
Jones
upwardly
revised
estimate
of
155,000
jobs.
It
is
the
fastest
employment
growth
the
U.S.
economy
has
seen
since
July
2023.

The
stock
market
has
also
made

record
gains
over
the
past
several
months
and

housing
values
have
soared,
though
they
have
now
begun
to
decline
as
inventory
improves.

Besides
sticky
high
prices
that
are
projected
to
cool
in
the
coming
year,
Zandi
said
that
the
fundamentals
of
the
current
U.S.
economy
are
nearly
ideal:
“The
economy
is
picture
perfect.
It’s
hard
to
argue
with
it.”

The
U.S.
economy’s
recent
outperformance
is
the
result
of
several
factors.

“It’s
both
policy
and
luck,”
said
economist
Joseph
Gagnon
of
the
Peterson
Institute
for
International
Economics,
a
think
tank
based
in
Washington,
D.C.

In
response
to
the
economic
quake
of
the
pandemic,
the
U.S.
government
injected
roughly

$4
trillion
of
stimulus
into
the
economy
to
support
individual
households
and
businesses.

“We
had
more
fiscal
stimulus
than
any
other
country
and
that
is
part
of
the
reason
why
the
U.S.
has
recovered
from
the
Covid
depression
better
than
any
other
country,”
said
economist
Josh
Gotbaum,
a
former
White
House
and
Treasury
Department
official
in
both
Republican
and
Democratic
administrations
and
currently
a
guest
scholar
at
the
Brookings
Institution.

America’s
stimulus
safety
net
came
with
a
hefty
price
tag,
leaving
the
U.S.
with
a
much
larger
budget
deficit
than
other
countries.
But
it
also
kept
the
economy
afloat,
by
providing
a
cushion
so
that
companies
did
not
have
to
execute
mass
layoffs
that
might
have
spiraled
into
a
recession.

That
labor
market
resilience
has
stuck.
Even
as
the
Federal
Reserve
sharply
raised
interest
rates,
the

unemployment
rate
has
remained
below
4%
for
the
past
two
years,
though
it
edged
slightly
higher
in
February.

Meanwhile,

Canada’s
unemployment stood
at
5.8%
in
February,
a
.1-percentage-point
increase
from
January. The
European
Union’s
unemployment rate
was
6.0%,
according
to

Eurostat.

The
U.S.
economy’s
position
on
the
global
stage
is
also
a
product
of
its
resilience
in
the
face
of
geopolitical
crises
and
the
unique
setup
of
the
American
financial
system.

As
Russia’s
invasion
of
Ukraine
disrupted
global
energy
and
food
prices,
for
example,
the
U.S.
was
not
hurt
as
much
as
areas
like
Europe
and
Japan,
which
rely
more
heavily
on
Russian
energy
and
food
imports.

“That’s
the
luck
part,”
said
Gagnon.

The
U.S.
economy’s
resilience
is
also
a
result
of
its
unique
debt
structures.

U.S.
households
were
more
insulated
from
spikes
in
global
rates
because
of
the
30-year
fixed-rate
mortgage,
which
allowed
households
to
lock
in
extremely
low
mortgage
rates
from
the
early
days
of
the
pandemic.
That
30-year
mortgage
rate,
which
is
mostly
unique
to
the
U.S.
financial
system,
protected
households
as
rates
later
heated
up.

“Our
banking
system
takes
a
lot
of
interest
rate
risk,
but
in
the
rest
of
the
world,
they
shove
it
on
to
the
household,
on
to
businesses,”
said
Zandi.
“That
was
really
important
this
go
around.”

Even
as
the
U.S.
economy
stays
ahead
of
the
rest
of
the
developed
world,
there
is
still
room
for
setbacks
in
the
recovery.

“I
don’t
think
we
can
conclude
that
we’ve
soft-landed,
that
we’re
free
and
clear,”
said
Zandi.

For
now,
the
Federal
Reserve
remains
hawkish
on
interest
rates,
despite
previous
indications
the
central
bank
would
issue
three
cuts
this
year.

Atlanta
Federal
Reserve
President

Raphael
Bostic
now
expects
just
one
rate
cut
this
year,
likely
toward
the
fourth
quarter.

“The
road
is
going
to
be
bumpy,”
Bostic
said
Wednesday
in
an
interview
on
CNBC’s
“Squawk
Box.”

And
while
the
path
of
the
U.S.
economy’s
recovery
is
still
uncertain,
experts
are
optimistic.

“We’re
basically
on
or
above
the
track
we
were
on
before
the
pandemic
hit,”
said
Gagnon,
of
the
Peterson
Institute.
“So
that’s
pretty
darn
good.”

Correction:
This
story
has
been
updated
to
correct
the
spelling
of
Josh
Gotbaum’s
name.
It
has
also
been
updated
to
clarify
the
Dow
Jones
upwardly
revised
estimate
of
private
sector
job
growth
for
March.