The American people and the world have already started counting down to what could be considered the most troubled American elections ever, not only because of the character of the candidates, but also because of the health and economic crisis that haunts this country and the world.
Given the state of uncertainty and instability in American society, it is important to compare the economic results of the presidency of Barack Obama with those of the administration of Donald Trump and analyze the economic plan of the current candidates, as well as the perception of the economic results by the American people.
If, on the one hand, the tremendous impact of the health crisis on the American economy is undeniable, with a growth of -31,4% in the second quarter of the year compared to the same period last year. On the other hand, in the period before the pandemic, it is unquestionable that, during the Trump administration, this country's economy was characterized by prosperity. But was it, as Trump says, that the economic results were better than those obtained during the Obama presidency?
During Trump's term, the peak of economic growth was 3% while under Obama's presidency it was 3,1%. Looking at periods of crisis, the biggest decline during Obama's term was -2,9% in 2009, while under Trump's administration, the biggest drop is expected to be recorded this year, with a -6,5 drop expected. , 2009% in economic growth. In addition, income has increased, the biggest increase seen in the Trump period, and the unemployment rate has dropped with both administrations, except this year, where unemployment has increased widely and in XNUMX, the year in which wages decreased and the unemployment has increased.
The analysis of the results of these different administrations led economists to attribute to Obama the solid economic recovery from the crisis and to Trump the maintenance of economic results until the pandemic recession.
It is also important to compare the economic plan of the current candidates. Regarding taxes, Trump has set himself the goal of reducing taxes by extending the Tax Cuts and Jobs Act by 2030, which will reduce tax revenues by $ 1,5 billion, while Biden's proposal goes in the opposite direction, that is, an increase in taxes, such as the tax on higher earnings and corporate earnings, which will increase tax revenue by four billion dollars between 2021 and 2030. This revenue would finance the development of infrastructure and R&D, which, according to Biden's plan, play a key role in facing rival countries, preventing a trade war.
Trump's policy on infrastructure is still unclear, but he suggested a "big and bold" two billion dollar plan financed by low-interest loans, which will further increase American debt and, in relation to trade, he believes that the current president will continue the trade war with China, maintaining his strategy "America First".
Regarding employment and wages, both strategies depend heavily on the infrastructure development plan. Trump's plan is not yet fully defined, but he suggested the direct injection of money into certain key industries and aims to raise the minimum wage, leaving it up to the different states. Biden's plan is to create jobs at the level of the middle class through his infrastructure plan: this implies the construction of renewable energy infrastructures, anchor institutions and climate resilience industries, he also plans fiscal support for communities that have gone through lay-off en masse or the closure of a large government institution; and intends to increase the minimum wage by 15 dollars and, due to the health crisis, its proposal is to have all 50 states adopt short-term compensation programs that will be fully financed by the federal government. That said, researchers suggest that Biden's proposal would lead to faster economic growth, higher wages and reduce American debt.
Finally, what could be considered the most important component is the perception of economic results by the American people. Studies say that when people evaluate the country's economic health, they may be more influenced by recent history than by the latest fluctuations (like the current pandemic crisis) or by long-term trends, which favors Trump as the economy has prospered. Before the health crisis, 59% of Americans rated this as the best economy since the late 90s, which is at least debatable when comparing Trump's economy to Obama's economy. On the other hand, despite facing one of the biggest crises of all time, 30% of Americans believe that the “economy is fine”, while only 17% believed the same in the 2008 crisis.
In a reality marked by uncertainty, in which emotions increasingly blur the reading of numbers, the confrontation between economic reality and the perception of economic results, the profiles and proposals of candidates Joe Biden and Donald Trump will play a central role in the outcome of the American elections, which has so far remained uncertain.
The exposed article results from the partnership between Jornal Económico and Nova Economics Club, the group of students of Economics of the Nova School of Business and Economics.