Consumer sentiment about the state of the economy could be crucial in shaping the outcome of the 2024 presidential election.
President Biden is still struggling with how to address one of his major weaknesses: inflation, which has recently decreased but surged in the early years of his presidency. Former President Donald J. Trump’s frequent economic boasts are contradicted by the significant job losses and disruptions in the supply chain caused by the pandemic.
Here’s a fact check of some of their recent claims regarding the economy.
Both candidates misrepresented inflation.
What Was Said
“They had inflation of — the real number, if you really get into the real number, it’s probably 40 percent or 50 percent when you add things up, when you don’t just put in the numbers that they want to hear.”
— Mr. Trump at a campaign event in Detroit in June
“I think it could be as high as 50 percent if you add everything in, when you start adding energy prices in, when you start adding interest rates.”
— Mr. Trump in a June interview on Fox News
This is misleading. Karoline Leavitt, a spokeswoman for the Trump campaign, cited a 41 percent increase in energy prices since January 2021, and prices for specific energy costs like gasoline rising more than 50 percent during that time.
However, the most widely used measure for overall inflation, the Consumer Price Index, has increased by about 20 percent since January 2021, less than half of Mr. Trump’s estimate. Year-over-year inflation peaked at 9.1 percent in June 2022.
In comparison, under Mr. Trump, the index cumulatively rose by about 7.4 percent from January 2017 to January 2021, and year-to-year inflation peaked at 2.9 percent in July 2018.
The index does include energy prices, but Mr. Trump is right that it has not included interest rates since the 1980s for a variety of reasons. In a 1982 paper explaining why the C.P.I. would take into account rental costs rather than mortgage rates, economists from the Bureau of Labor Statistics wrote that mortgages were in part investments for the future, while the inflation index should focus only on current consumption.
If interest rates were included in the C.P.I. and given a heavy enough weight in the calculation, it is possible that the resulting index could have risen by 50 percent under Mr. Biden, said Judd Cramer, an economist at Harvard University.
Dr. Cramer was an author of a recent working paper that assessed the effect of including borrowing costs on C.P.I. and its relation to consumer sentiment. Once accounting for housing costs and interest payments, annualized inflation peaked at 18 percent in November 2022, according to the paper, compared with the official rate of 7.1 percent.
But Dr. Cramer rejected Mr. Trump’s characterization of an index that factored in interest rates as a more accurate gauge or “real” rate of inflation.
“Nobody would have said that the real price of goods fell by 10 percent during the first Obama administration because mortgage rates went down,” he said, adding that mortgage rates affect a small subset of Americans. “I don’t think that’s the way anybody thinks about it.”
“The point of our paper,” Dr. Cramer said, “is that consumers do care about interest rates, about what they pay on their credit cards, about what they pay if they want to buy a home, about car payments, so we should be thinking about those things.”
“But in terms of what the B.L.S. is measuring, we think they’re doing it correctly,” he added.
What Was Said
“I think inflation has gone slightly up. It was at 9 percent when I came in, and it’s now down around 3 percent.”
— Mr. Biden in a May interview with Yahoo! Finance
False. Year-over-year inflation was 1.4 percent in January 2021, when Mr. Biden took office. It peaked at 9.1 percent in June 2022, more than a year into his presidency, and has fallen to 3.3 percent in May.
Mr. Trump made false claims about job growth under Mr. Biden.
What Was Said
“One hundred percent of the jobs created have gone to illegals.”
— Mr. Trump at the Detroit event
False. Official estimates of employment do not support Mr. Trump’s statement. And estimates from various groups show that the population of unauthorized immigrants has grown in recent years, but not nearly enough to take all the jobs created during Mr. Biden’s presidency.
Two groups that advocate lower levels of migration and stricter border security have estimated that there are 2.3 million to 2.5 million more unauthorized immigrants in 2023 than in 2020. One group, the Center for Immigration Studies, estimated a total population of 12.8 million while the other, Federation for American Immigration Reform, pinned the number at 16.8 million.
The economy has added more than 15 million jobs since January 2021.
Ms. Leavitt, the Trump campaign spokeswoman, cited an increase of 414,000 foreign-born workers in May, compared with a decrease of 663,000 native-born workers last month.
But monthly fluctuations do not tell the entire story. For example, in April, the number of foreign-born workers decreased by 632,000 and the number of native-born workers increased by 866,000. Overall, the Bureau of Labor Statistics estimated that 29.9 million foreign-born workers — both authorized and unauthorized — and 131.1 million native-born workers were employed in 2023. That is an increase of 5.1 million in employed foreign-born workers and 8.1 million native-born workers since 2020.
What Was Said
“Under Biden, zero manufacturing jobs were created in the month of March. You know that, right? Zero. I don’t think that’s ever happened. Zero. It’s hard to do. Zero.”
— Mr. Trump in a May rally in Wisconsin
False. The manufacturing sector did shed about 6,000 total jobs from February to March, but Mr. Trump is wrong that this is unprecedented. Since the Bureau of Labor Statistics began tracking monthly manufacturing employment in 1939, the sector has lost jobs in about 40 percent of the months.
Under his own presidency, employment in the sector declined in seven months out of 12 in 2019, even before the coronavirus pandemic hit, and in the first four months of 2020.
Even as the total number of jobs declined in March 2024, the sector still hired 291,000 workers in March (335,000 left their jobs).
What Was Said
“We’ve already created 15 new million jobs — a record.”
— Mr. Biden in a June speech
This needs context. The economy added 15.6 million jobs from January 2021, the month when Mr. Biden took office, to May. By raw numbers, that is indeed a larger increase in new jobs over three years than the number added over other presidents’ full four-year terms since at least 1945.
But by percentage, Mr. Biden’s first 40 months still lag behind the job growth of some of his recent predecessors’ full terms. The economy added 10.9 percent more jobs under Mr. Biden so far, compared with 11.2 percent in President Ronald Reagan’s second term and 12.8 percent in President Jimmy Carter’s four years in office.
Mr. Biden is, of course, comparing his three and a half years in office with the entire terms or presidencies of his predecessors so the comparison is not equivalent. Moreover, Mr. Biden’s first years in office followed historic job losses caused by the coronavirus pandemic. Most importantly, presidents are not solely responsible for the state of the economy.
