Why the Biden Economy Numbers Were So Wrong6 min read

Us: “This economy is killing me”

The Administration:  “I don’t know what you’re talking about – this data says you should be happy and have lots of money

Us: “But I can’t afford eggs and gas.”

TA: “Yes you can, look at the data.”

Us: “I’m pretty sure I know what’s in my pocket, and you don’t know what’s in my pocket and I don’t have enough money for eggs and gas.”

TA: “Oh yes you do, just look at these highlighted high-level statistics.” ¹

One of the many reasons Kamala Harris was not re-elected was because the Biden administration’s rosy reports on the economy were not felt or seen by the middle class, who have lived with depressed wages^{2 3}, high food and housing prices, and unemployment.⁴ A recent Politico article, Voters Were Right About the Economy. The Data Was Wrong, explains nicely the problem with the numbers that were reported. To some extent, it implies that the Biden admin was innocently, ignorantly using the same numbers as always, not realizing that they were not using the correct indicators. ⁵ Whether or not it was their ignorance or malice we may never know, but despite Hanlon’s Razor, I am voting for self-interested malice.

The Biden administration, like most governments, relied on standard Key Performance Indicators (KPIs) to assess the economy, such as GDP growth, unemployment rate, and inflation figures. However, critics argue that these metrics often fail to capture the reality of middle-class and working-class Americans. Below is an analysis of which KPIs were misleading and which alternative KPIs would have been more accurate.

Misleading KPIs Used by the Biden Administration

1. Unemployment Rate (U-3)

The official unemployment rate in 2023-2024 remained low (~3.5%-4%), which the administration touted as a sign of economic strength.

Problem: This metric does not account for:

• People who stopped looking for work (labor force participation rate).
• Underemployment (e.g., people working part-time but wanting full-time jobs).
• Reality on the Ground: Many Americans were struggling with job quality, not just job quantity.

2. Gross Domestic Product (GDP) Growth

The Biden administration pointed to GDP growth as proof of economic success.

Problem: GDP aggregates all economic activity but does not reflect who benefits from that growth.

• Rising stock prices and corporate profits can inflate GDP while real wages stagnate for average workers.
• Reality on the Ground: Many Americans felt they were falling behind despite “economic growth.”

3. Inflation Rate (CPI)

The Consumer Price Index (CPI) showed inflation declining in 2023-2024 from its 2022 highs.

Problem: CPI tracks a broad basket of goods but does not fully capture price volatility in necessities like food, rent, and energy.

• Reality on the Ground: Even as headline inflation cooled, Americans still faced high grocery and housing costs.

4. Stock Market Performance

The administration cited record-high stock market gains as a sign of prosperity.

Problem: The stock market disproportionately benefits wealthier Americans with investments.

• Reality on the Ground: Most working-class Americans do not significantly gain from stock market booms.

Better KPIs for an Accurate Economic Picture

1. Real Wages Adjusted for Inflation (RWI)

Instead of just tracking unemployment or wage growth, real wages (income adjusted for inflation) provide a clearer view of purchasing power.

• Why it Matters: Even if people have jobs, their wages must keep up with costs.

2. Cost-of-Living Index (COLI)

A localized measure that reflects how expensive essential goods and services are in different regions (food, rent, transportation).

• Why it Matters: National inflation numbers may understate the burden in high-cost areas.

3. Labor Force Participation Rate (LFPR)

Unlike the unemployment rate, this measures the percentage of working-age people actually in the workforce.

• Why it Matters: A declining participation rate can signal economic distress despite a “low unemployment rate.”

4. Household Debt-to-Income Ratio (DTI)

Measures how much debt (mortgages, student loans, credit cards) households carry relative to their income.

• Why it Matters: Even if wages are rising, Americans taking on more debt to afford basics signals economic strain.

5. Food & Housing Affordability Indexes (HPI, HTI, SIR, FAI)

Tracks how much of a median income household must spend on food and rent/mortgage payments.

• Why it Matters: If shelter and food eat up an increasing share of income, economic hardship is rising.

“All Data on Important Matters are Fake”

Iconoclast and cartoonist Scott Adams produces my favorite daily podcast, Coffee with Scott Adams. His helpful insights and reframes are not only in his books, but taught daily in the podcast. One phrase he often repeats is, “all data is fake.” What he means is that:

• All statistics are carefully curated by those who present them (often cherry picked)
• All of our means of measurement are typically much less accurate than we think
• Fraud is a real factor that we should not ignore

Or as Mark Twain wrote in his autobiography, Chapters from My Autobiography (published in North American Review, 1906):

Figures often beguile me, particularly when I have the arranging of them myself; in which case the remark attributed to Disraeli would often apply with justice and force: ‘There are three kinds of lies: lies, damned lies, and statistics.’

Conclusion: A More Grounded Approach to Economic Analysis

The Biden administration focused on traditional macroeconomic indicators that often painted a rosier picture than reality. A more realistic assessment would prioritize cost-of-living realities, real wages, and financial stress on households, rather than relying on topline economic stats that mask inequality and inflationary pain. And perhaps trust can be restored in our leaders. But after so much corruption, it’s going to take time.