Stefania Bargardi, November 2023.
Pandemic marked a global turning point in economic activity, and the United States was no exception. Particularly this country went through a change of government in the full wave of covid, which also meant a change of political color and therefore ideological. What did these changes mean in the world's most capitalist market?
When we compare economies from different countries, or even the economy of the same country, but in different periods, we resort to national accounts and mainly to the composition of GDP per capita.
The disjunctive is to compare between two presidential periods depending on the per capita GDP:
- The presidential period of Donald Trump (2017-2021) with that of Joe Biden (2021-2024 with projections).
This comparison will help us analyze the performance of the management of one of the most important countries in the world, geopolitically speaking, during the greatest crisis that humanity has experienced in recent decades.
Introduction
“GDP is defined as the total value of all goods, services and structures produced by a nation’s economy over a specified period; in other words, the total value of the economy’s production.” (C.R.O; 2022)
However, GDP growth does not give any indication of how income is growing distributed within the economy (C.R.O; 2022) so we will use GDP per capita.
According to World Bank data (2023) the global economy had stable growth in recent years, but was interrupted by COVID-19 pandemic with a major decline in 2020. The OECD (2021) calculated that world GDP fell 4.2% during 2020.
In turn, the United States was affected to a similar extent by this situation, resulting in a contraction of its 3.7% GDP.
Due to the IOC-19, both the real GDP and the real GDP per capita fell in the first half of the year, but have since recovered and exceeded the pre-pandemic levels.
Another peculiarity of this period was the massive expansion of digital commerce, due to the isolation and prevention measures by pandemic. This represented an opportunity for the American economy representing 68% of digital world trade. (Samples, 2022)
In addition, it is prudent to point out that the US economy has many inequalities, but it is also very diverse among each state, since some have major development of agriculture, but others of service and technology, so the composition of the economy of each state varies greatly.(Aromi, 2023)
For Cuervo (2023), American economic policy is defined in relation to the world economy: the axes are foreign trade policy, geopolitics with multilateral bodies, capital flows, technological leadership, decisions of its transnational corporations (MNC) and military power.
But a force of this country is that it has absolute monetary sovereignty, since its currency is the international reserve currency and, above all, the global means of payment; for this reason, a global crisis directly affects the US economy, probably more than other states.
To be able to analyze these variables in a period (Biden) it is necessary to contrast evolutionaryly in time and therefore compare it with the immediately preceding presidential period (Trump).
Comparative analysis
U.S. national accounts in recent years seem to remain in a decline that results in the retraction of GDP and fiscal deficit. (Aromi, 2023)
With an inflation that quadrupled between 2021 and 2022 (Cuervo, 2022), faster than the global inflation caused by the War in Ukraine.
Although a dichotomy is raised between the ideological character of Donald Trump and that of Joe Biden for belonging to opposite parties, Republican and Democratic respectively, both represent economic policies of Neo-Keynesianism (Cuervo, 2022) Therefore, in the economic sector, the objectives are similar to both, but at ideological level the “forms” reflect discrepancies.
For Cuervo (2023) the Trump era was a transition period between the second paradigm (D.C.A. that sees the state as the problem and seeks to reduce it to the minimum), and the third paradigm of the return to strategic industrial policy and the limit to the hyperglobalization represented in Biden's management.
The management Trump 2017-2021 America First
In the national sector, Donald Trump inherited a complete recovery economy: with an unemployment rate of 4.7%; 76 consecutive months of job growth with an increase of 227,000 monthly posts for 35 months. While GDP continued to grow to 2.5% per quarter and the average inflation of 2017/2020 of 1.4% per year (Cuervo, 2023). However, at the international level, Trump launched his administration under the motto “America First”, a program that was based on the “commercial war” with China, the confrontation with the World Trade Organization (which paralyzed much of its action), back on the projects of economic integration, as well as the withdrawal of environmental commitments from the 2015 Paris Summit. (Bargardi, 2019)
In the domestic economy, it introduced a plan of tax exemptions to the capital (stakeholders), which were added to existing ones and the promotion of consumption. During the development of its government, the unemployment rate fell to 3.5 % and GDP growth averaged 2.49 % annually for the first three years and a 3.40 % fall in the fourth year (pandemic-2020), with GDP per capita growing to 1.94 % average between 2017 and 2019 and falling to 4.32 % in 2020.
As a transition period analyzed by Cuervo (2023), Trump began looking inside rather than guiding himself for international trends.
Bidenomics
Unlike its predecessor, Biden undertook to expose the new format of multilateralism in global trade, generated from economic policy in a world where China reaffirms its presence through the “Franja and Rota” Initiative. Bidenomics operates as a platform in the West to install the III Paradigm of the world economy since 1945: the recovery of the Manufacture Industry and the return of Industrial Policy, the revitalization of communities, an economy centered on workers and the middle class and a commercial policy opposed to hyper globalization. Unlike Trump, Biden attempts to adapt the US to the new era of globalization, but without relying on it, in a more diplomatic and dialoguistic way, than that used by the Republican. Where to open the world is not badly seen while strategic industries are preoccupied and competition is loyal (Bargardi, 2022 and 2019)
Bidenomics nourishes policies, laws and resources with “bipartisan” support, calling Democrats and Republicans, with majority in Congress (Cuervo, 2023). The central differences are not in what, because they both seek to make America great again, but in how.
The aim of Bidenomics is to limit globalization, not to deny it; with a paradigm of the return to the geopolitics of trade and industrial policy.
It is necessary to stress that the global context of pandemic has increased the need for international cooperation in the face of a problem that goes beyond national borders and seeks global solutions (Bargardi, 2020) and, therefore, a diplomatic and ideological turn was needed in the face of the United States' relationship with the rest of the world during the presidency of Biden.
As for the economic projections of 2023 and 2024, world growth will slow down by 2023 to 2.1 %. But it will accelerate again to 2024 at 2.4%. (World Bank, 2023) and will affect the advanced economies like that of the US. Asensio (2023) points out that U.S. GDP will end this year with a growth of around 2% and that the next year the expansion will fall to 1.3 points and will be in the range between 0.9% and 1%. That is, the US economy will fall and this will generate a domino effect with the rest of developed or emerging economies of the world.
This means that the slowdown in GDP growth was a factor that remained from the Trump era to the Biden era, even with annual growth, but increasingly smaller.
Conclusion
The United States is a country in which state policies last in time, regardless of the political color that has most of its representatives, so between the two periods analyzed, the goals were similar and continuous. Those who differentiated Biden and Trump were the “idological” ways of making politics, especially the one designed for international sand as to the relationship of this country with the rest of the world. While Trump was less “diplomatic” and tajante about his nationalist economic and commercial policy, Biden was more dialoguist and prudent to continue building cooperation without losing sovereignty.
As for economic performance, Trump assumed a growth base that helped him implement his economic policy goals, but was interrupted by pandemic. Joe Biden had to assume a mandate marked by the global and local recession, but learned to leave the flote, although with a growing GDP, it is projected that it will be more slow than that of its predecessor.
The economic performance of the democratic management seems to be quite good if we look at the basis on which it should work, unlike Trump who assumed with a stable and growing economy. The truth is that the last months of a predecessor influence the later development of a new government, and regardless of who wins the elections in 2024, the projections give not so good results. We will see if the solutions are included in a global agenda or with full isolationism.
U.S. program 2023
University of Buenos Aires
U.S. Embassy in Argentina
Stefania Bargardi
November 2023
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