Politics
Joe Biden’s Economic Record: Is It Really Benefiting Regular People?
courtesy of jacobin.com
Many have touted Joe Biden's economic record, pointing to an increase in median household wealth. However, a closer look reveals that this uptick is largely due to inflated home and car values, which offer little help to everyday Americans who rely on their homes and vehicles for their livelihoods.
The Disappointments of Biden's Economic Policies
Left-wing intellectuals have expressed disappointment in Biden's failure to reform the labor market and welfare state. For regular people, the unwinding of the COVID welfare state and inflation have led to a decline in real incomes for the majority.
While some argue that the COVID welfare state was always meant to be temporary and that inflation was a necessary risk, this does not change the fact that people's economic circumstances have worsened.
Looking Beyond Incomes: The Importance of Wealth
Some have suggested that we should shift our focus from inflation-adjusted incomes to wealth when assessing economic well-being. The 2022 Survey of Consumer Finances, which measures wealth, has been cited as evidence of a positive trend.
However, this survey is conducted every three years, and the data only allows for a comparison between 2019 and 2022. It is possible that wealth increased in 2020 and 2021 but declined in 2022 and more recently, mirroring the pattern seen with incomes.
The Impact of Rising Home and Car Prices
Bank account data from JP Morgan reveals that balances in checking and savings accounts reached their highest levels in early 2021 but have steadily declined since then. This decline, coupled with welfare cuts and inflation, can understandably leave individuals dissatisfied with their personal finances.
Examining the SCF data, we see that the increase in wealth is largely driven by inflated prices of used homes and cars. The average value of primary residences increased by $47,459 for the median quintile, while the average value of vehicles increased by $6,358. These two factors accounted for 99% of the median quintile's increase in net worth.
courtesy of jacobin.com
The Limitations of Increased Wealth
While the jump in home and car prices may contribute to an increase in net worth, it offers limited utility to regular people who rely on these assets for their daily lives. Selling second homes or cars to take advantage of capital gains is not a viable option for non-rich individuals.
Furthermore, the inflated prices of homes make it difficult for first-time buyers or those looking to replace their worn-out cars. Even current homeowners who wish to switch homes face higher mortgage payments due to increased interest rates.
Accessing home price increases through home equity loans or lines of credit is also less viable now, as interest rates for these financial products have exceeded 9 percent.
The Reality for Regular Americans
When considering these wealth statistics and indicators from the past few years, it becomes clear that there has not been a significant improvement in the financial circumstances of regular people. Cash balances have rapidly declined, further exacerbating the challenges faced by everyday Americans.
While Biden's economic record may have some positive aspects, it is essential to look beyond surface-level wealth statistics to understand the reality for regular Americans.
Matt Bruenig is the founder of People's Policy Project.
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