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A Project of The Annenberg Public Policy Center

Biden’s Twist on U.S. Economy

Biden twisted international data on economic growth when he said the U.S. is “the only country in the world expected to continue to grow.” India, China and several Asian nations are expected to grow much faster than the U.S., just not as fast as they have in past years.

Overall, the U.S. gross domestic product is expected to grow at a faster rate than the world average in 2015, but a little slower than the world average in 2016 and 2017.

Putting his spin on the nation’s economic recovery during a speech at the U.S. Conference of Mayors on Jan. 22, Biden argued that an international comparison is in order (at the 18:10 mark).

Biden, Jan. 22: Listen to what the international community says. International Monetary Fund — every year rates what they expect the growth rate to be in the world, country by country. [The U.S. is] the only country in the world expected to continue to grow. They estimate growth rates at over 3.6 percent in the next two years. Every other part of the world, all of our competitors — their growth rate is being cut in half or is below zero. China, Europe — that’s not good for us. We want them to grow.

The following day, during a speech in Los Angeles, Biden reiterated the point (at the 7:40 mark).

Biden, Jan. 23: We are … better positioned than any nation in the world to lead the world economically. Look at the numbers. Look at the World Bank projections. Look at the IMF projections. We’re the only nation in the world where we’re projected to grow significantly. Every other nation’s going to have their GDP cut significantly. The Chinese it’s been predicted to be cut in half of what it was in the previous 15 years. That’s not a good thing; we want them to grow.

While the comments give the distinct impression that U.S. GDP growth is outpacing every other country, and that the U.S. is the only country with a growing GDP, that’s not the case at all.

Let’s go to the two sources listed by Biden, the International Monetary Fund and the World Bank.

In a news release on Jan. 19, the IMF announced updates to its World Economic Outlook from its forecast in October 2014. Those updated projections showed the U.S. economic outlook had improved since its last report, and in fact with regard to GDP, “the United States is the only major economy for which growth projections have been raised.” The IMF cited the declining unemployment rate, appreciation of the dollar and a decline in oil prices for the upgraded forecast for the U.S.

IMF, Jan. 19: Among major advanced economies, growth in the United States rebounded ahead of expectations after the contraction in the first quarter of 2014, and unemployment declined further, while inflation pressure stayed more muted, also reflecting the dollar appreciation and the decline in oil prices. Growth is projected to exceed 3 percent in 2015–16, with domestic demand supported by lower oil prices, more moderate fiscal adjustment, and continued support from an accommodative monetary policy stance, despite the projected gradual rise in interest rates.

But that doesn’t mean the economies of all other countries are not growing. Germany, France, Italy, Japan, the U.K., India, Brazil, Mexico and South Africa will all see an increase in GDP year over year, but the updated projections show their economies won’t increase as much as projected in October.

Nor does it mean there aren’t countries whose GDP is expected to grow faster than the U.S. In fact, even as the IMF downgraded the GDP forecast of major economies outside the U.S., the overall global growth of GDP was projected at 3.5 percent in 2015 and 3.7 percent in 2016 — tracking the projected GDP growth in the U.S.

Biden is correct that China’s GDP growth is well below where it was in the 2000s, but the latest forecast of GDP growth in China — 6.8 percent in 2015 and 6.3 percent in 2016, according to IMF forecasts — is still nearly double the growth rate projected for the U.S.

The U.S. has the world’s largest economy, with a GDP of $17.5 trillion in 2014, followed by China ($10 trillion), Japan ($4.8 trillion), Germany ($3.9 trillion), France ($2.9 trillion), U.K. ($2.8 trillion), Brazil ($2.2 trillion), Italy ($2.2 trillion), Russia ($2.1 trillion) and India ($2 trillion).

Data on GDP from the World Bank presents a similar picture to the IMF. According to the World Bank’s Global Economic Prospects report, the world’s economic prospects are expected to improve in 2015, but the report warned that some trends present some “downside risk.”

World Bank, Jan. 13: Underneath the fragile global recovery lie increasingly divergent trends with significant implications for global growth. Activity in the United States and the United Kingdom is gathering momentum as labor markets heal and monetary policy remains extremely accommodative. But the recovery has been sputtering in the Euro Area and Japan as legacies of the financial crisis linger. China, meanwhile, is undergoing a carefully managed slowdown with growth slowing to a still-robust 7.1 percent this year (7.4 percent in 2014), 7 percent in 2016 and 6.9 percent in 2017. And the oil price collapse will result in winners and losers.

Overall, the World Bank stated, “After growing by an estimated 2.6 percent in 2014, the global economy is projecteGDPWBd to expand by 3 percent this year, 3.3 percent in 2016 and 3.2 percent in 2017.”

As the accompanying chart shows, the World Bank expects GDP growth in the U.S. to do slightly better than the world average in 2015 (3.2 percent in the U.S. versus 3.0 percent for the world). But in 2016 and 2017, the World Bank projects the GDP growth for the U.S. will lag the world average.

As for China, it’s true that GDP growth has been more rapid in years past, with a peak of 14.2 percent in 2007. But the projected growth rate in China is still more than double the growth rate for the U.S. As the report noted, China is “undergoing a carefully managed slowdown” but growth is at a “still robust” 7.1 percent in 2015.

Biden is correct that the U.S. economy is outperforming most major competitors, particularly those in Europe. But it’s an exaggeration to say the growth rates for European countries have been cut in half.

The IMF downgraded its forecast for GDP growth in the European nations of Germany, France, Italy and Spain to 1.2 percent in 2015. That’s 0.2 percentage points lower than it had projected in October. And while there have been a few instances of countries seeing a net decline in GDP in 2015 (such as Russia), most are projected to improve, just not as quickly as the U.S. But in the case of India (which is projected to see 6.3 percent growth in 2015), China and several Asian nations, the growth rate — even with downgraded forecasts — is expected to be much higher than in the U.S.

— Robert Farley