Shelter from the Storm: Biden Presidency in Historical Context, Volume 1

The Cowen Insight

One full year of the Biden presidency has passed and the midterms are a year away. We use 13 data sets over the first year of seven presidencies to provide historical context for the current environment.

Three Key Takeaways on the Economic, Regulatory & Legislative Fronts

1. Record low unemployment & GDP growth, but nearly the lowest consumer confidence in 40 years & second highest inflation mark
2. 52.5% increase over previous record of economic significant regulations
3. $3T+ in fiscal policy legislation unmatched

Key Data to Watch for Midterm Elections

We have found a duality in the past 40 years of economic data that seems to serve as a bit of a Rorschach Test on both the economy and governance with a lot of complex undercurrents. This duality will likely play out in 10 months with the midterm elections. How people feel going into the Fall determinative for midterms (consumer confidence > corporate earnings growth).

If confidence rebounds — and it could with potential for policy wins, continued growth & inflation dip — there is a window for Democrats, but it is very narrow.

Two keys to watch: (1) inflation; and (2) consumer confidence.

Benchmarks to Find Signals in the Noise

1. Choose Your Own Adventure: Economic Records Historically Good & Bad

Good: unemployment, growth & S&P 500 – Biden presided over the biggest drop in unemployment in his first year with the lowest level on record (40 years), record GDP growth, and the S&P 500 just trails Obama’s record.

Bad: consumer confidence & inflation – The economic narrative starts to change with inflation & consumer confidence. Inflation trails only Reagan and Biden has had the 2^nd biggest drop in confidence from a predecessor behind only the Great Recession in January 2009.

2. Return of the Deep State

There was a 35% increase in Executive Orders over the previous record – in the midst of a pandemic no less.

3. Legislative Size, Scope & Speed

This is very much a story of quality of quantity: no one in 40 years touches Biden in terms of fiscal size and scope. The $1.9T American Rescue Plan, arguably the largest bill in American history, was signed into law on the 40^th day of his administration with the $1.2T bipartisan Infrastructure Framework following on the 299^th.