Biden’s economy has best growth record since Clinton

We’re more than a year-and-a-half into Joe Biden’s presidency, with full second-quarter economic growth numbers from the US Bureau of Economic Analysis now in hand. Which seems like as good a time as any for another installment in my occasional series comparing growth rates under US presidents — which somewhat to my surprise shows Biden on pace to compile by far the best growth record since Bill Clinton.
Yes, this is adjusted for inflation, albeit using the gross domestic product price index, which hasn’t been rising quite as fast as the better-known consumer price index. And yes, I measure growth here using not GDP alone but the average of GDP and another metric tracked by the BEA, gross domestic income. In theory GDP and GDI should be equal, but they are estimated from different sources and so far this year are showing very different economic trajectories for the US. GDP fell at a 1.6% annualized rate in the first quarter and 0.6% in the second, according to the latest BEA estimates, while GDI rose 1.8% and 1.4%.
There have been a lot of complaints lately that the Biden administration and the media are shifting the goalposts on how recessions are defined by looking past those two consecutive quarters of negative GDP growth to other indicators such as payroll employment, industrial production and real incomes that show continued growth. In reality, the National Bureau of Economic Research has been the semi-official arbiter of when US recessions start and end since well before there was such a thing as GDP, and economists there have continued to focus on data series more frequent and less susceptible to subsequent revision than the quarterly GDP numbers.
By using an average of GDP and GDI to measure economic growth I really am shifting the goalposts, but I think it’s justified. Interest in the metric, which the BEA began mentioning in its quarterly GDP reports in 1998, began picking up in the late 2000s after Jeremy Nalewaik, an economist then at the Federal Reserve Board and now at Goldman Sachs, argued in a 2006 working paper that GDI “has done a better job recognizing the start of recessions” than GDP. The NBER’s Business Cycle Dating Committee first referenced GDI in one of its recession announcements in 2008.
In 2013 the Federal Reserve Bank of Philadelphia began reporting what it calls GDPplus, which combines GDP and GDI in a “statistically optimal” way and is currently showing annualized economic growth of 2% in the first quarter of this year and 1.8% in the second. In 2015 the BEA started reporting the simple average of GDP and GDI that I use here. This currently shows growth of 0.1% in the first quarter and 0.4% in the second. The first GDI estimate for each quarter comes out a month later than the first GDP estimate, and unless that changes it’s hard to imagine GDI or the GDP/GDI average supplanting GDP in public discussion. But economists and economic journalists, myself included, have been giving these measures more and more attention with each passing quarter. Right now, this happens to make the economic performance of the Biden administration look better than GDP alone does. For whatever it’s worth, it also makes economic growth under his predecessor look better.
Measured by real GDP alone, growth under Biden is 0.6 percentage points slower than by the GDP/GDI average — and 1.3 points below the 4% growth rate for GDI. It’s still the best since the Clinton years. For Donald Trump, the growth hit is smaller but puts him in last place among the presidents listed here.

—Bloomberg

Justin Fox is a Bloomberg Opinion columnist covering business. A former editorial director of Harvard Business Review, he has written for Time, Fortune and American Banker. He is author of “The Myth of the Rational Market.”