One way to guess at what someone is going to do is to see what they’ve done.
Former President Donald Trump had a first term from 2017 to early 2021 in which voters can judge the performance of the economy under his presidency. The Republican nominee is also on the stump touting tougher tariffs and other policies he has vowed to enact as president if he returns to the White House. And while Vice President Kamala Harris enters the race carrying the mantle of having been No. 2 under President Joe Biden and helping engineer a post-pandemic recovery, the Democratic nominee also has a number of key policy proposals that differ from Biden.
With Trump and Harris holding such intensely opposed views on so many subjects — and with so much on the line — The Atlanta Journal-Constitution put out a call for questions from readers to see what they want to know about.
Sure enough, when readers wrote in with queries, the economy was on a few minds. We’ve written a bit about the tariffs and the tax proposals. But some readers also wanted a sharper picture of the past.
Because a useful — but tricky — part of the discussion is that we not only have the candidates’ proposals, the candidates also have track records.
Q: I would like to see an article that shows the truth comparing Trump versus Biden (Democrats vs. Republican) in economics during each of their terms. Did Trump really improve the economy or was it because the Federal Reserve lowered rates which resulted in inflation, and did Biden really improve the economy to lower inflation? — Debbie Brilling
Great idea, Debbie! Too bad it’s not a simple comparison — mainly thanks to the pandemic — but armed with some caveats, compare we can.
First, consider Trump’s term, how things got complicated.
He often says that his was the greatest economy ever, which by a few measures is not true. Historically, growth in jobs and wages were solid under Trump — at least until the pandemic — but nowhere near record levels. Both Presidents Ronald Reagan and Bill Clinton, for example, saw stronger growth.
On the other hand, when Trump took office some pessimists predicted disaster and that didn’t happen either. Trump signed broad tax cuts. Those cuts didn’t spark the burst of expansion he had promised, but neither did they tank the economy.
The charts on most data — GDP, jobs, income, unemployment, inflation — show a general continuation of trends from President Barack Obama’s second term.
True, when Trump also imposed some tariffs in imports, the Chinese retaliated with their own and American exports dropped. The federal government made up for that with $28 billion in payments to U.S. farmers, but the overall economy kept chugging.
Unemployment, which had been slowly improving since the end of the Great Recession, was 4.7% when Trump took office, and it continued to decline.
Here’s the complication: The pandemic.
Trump at first downplayed the problem, then began presiding over nightly briefings. The crisis triggered a rash of shutdowns — along with a wave of sickness and death that took 400,000 lives while he was in office — sending the jobless rate soaring from 3.6% to 14.8%.
Had Trump, and the rest of the world for that matter, better handled the spread of the virus, would the economic damage have been as bad?
That’s hard to know. Trump did sign a massive spending package to juice the economy and soften the economic pain and — after a monumental loss of jobs for several months — the economy began to get traction and unemployment fell.
Biden and Harris entered office on Jan. 20, 2021, with a steep climb left to make it out of the pandemic ditch. Unemployment was at 6.4%.
Biden also pushed and passed two historic spending programs, the bipartisan infrastructure law, a bill to address a mounting backlog of infrastructure needs and something Trump failed to do in office, and the Democrats’ health and climate bill, known as the Inflation Reduction Act. Both of these laws bolstered American incomes.
On the metric of job growth, the Biden-Harris administration has far exceeded the monthly average job growth seen during the pre-pandemic time of the Trump years. The nation has also seen a surge in manufacturing jobs.
Under Biden, unemployment fell to a low of 3.4%. But as job growth surged, so did prices, thanks — economists say — to supply chain snarls and the federal spending of both presidents.
Behind both Biden and Trump, a powerful force was juicing the economy. The Federal Reserve Bank dropped rates starting in 2019 and kept them near zero, low rates that made borrowing cheaper, a come-on to consumers and companies alike to spend.
Meanwhile, the huge pandemic programs signed by both presidents were a stimulus, pouring trillions of dollars into the economy.
The Federal Reserve stepped in, starting in March 2022 to raise interest rates to help slow the economy and rein in prices.
Inflation hit a peak of nearly 9% in 2022 under Biden, but it has been falling since. It is also worth noting that most industrialized countries have struggled with post-pandemic inflation. Some saw higher rates than in the United States.
So, caveats in hand, let’s have a look at the numbers.
Inflation, of course, has been the main rap against Biden and Harris’ economic record.
Some of the pain was psychological — since the 1980s, Americans had become accustomed to low inflation. But some was decidedly real, of course. When Obama was president, inflation averaged just 1.4% and under Trump, it was 2.1% (although that includes the pandemic, when the plunge in consumer demand sent inflation down to near zero).
Then, as the economy rebounded, inflation picked up. And picked up some more. In 2022, it rose — for a few months — to about 9%.
It has fallen back to nearly 2%, but the average during the Biden administration has been 5.1% and no doubt, most prices are higher — sometimes a lot higher — than they were five years ago.
Even so, what matters is not the price, it’s the price compared to what you make.
And coming out of the pandemic, most workers received raises — sometimes hefty ones. So, on average, inflation-adjusted income is 5.9% higher now than when Biden took office.
Wage gains have been slowing, but they’re still higher than inflation, said economist Cory Stahle of Indeed’s Hiring Lab.
“It’s been giving a meaningful boost to workers’ purchasing power,” he said. “And pockets of the market remain especially strong. Wages for private unionized workers grew at a 6.4% annual pace in the third quarter.”
The catch: Averages are just that, so some people’s wages have not kept up with prices. And some people fell into debt when inflation was high and haven’t yet dug out of it, even if they have better pay now.
During Trump’s term the economy shrunk by 2.7 million jobs, an average loss of 51,000 per month across his four years in office. But during his first 37 months in office — that is, pre-pandemic — the economy added 6.67 million jobs, about 180,000 per month.
Inflation in that period was fairly low, but slightly higher than when Obama left office.
In the 44 months of data on the Biden-Harris administration, the economy added 9.19 million jobs, an average of about 366,000 per month, or twice as robust as even the pre-pandemic months of Trump’s term.
By the numbers
Monthly Job growth
Trump, pre-pandemic: 180,000
Trump, full term: -51,000
Biden, through Oct. 2024: 366,000
Wages and salaries*, average annual increase
Obama, second term: 2.1%
Trump: 2.9%
Biden: 4.5%
Average gas price, gallon, metro Atlanta
Trump takes office: $2.25
Trump, high: $2.82
Trump, depth of pandemic: $1.76
Biden takes office: $2.22
Biden high, after Russia invades Ukraine: $4.62
Biden recent: $2.90
Unemployment rate
Trump takes office: 4.7%
Trump high, pre-pandemic: 4.7%
Trump low: 3.5%
Trump high, full-term: 14.8%
Trump leaves office: 6.4%
Biden takes office: 6.4%
Biden high: 6.4%
Biden low: 3.4%
Biden recent: 4.1% (Oct. 2024)
Average 30-year mortgage rate
Obama, second term: 3.92%
Trump, pre-pandemic: 4.13%
Trump, full term: 3.87%
Biden, through Oct. 24: 5.43%
Change in S&P 500 stock index
Obama, second term: 51.2%
Trump, pre-pandemic: 49.2%
Trump, full-term: 70.1%
Biden (through Oct. 24): 50.8%
*Employment cost index, most recent data through June 2024
Sources: S&P Dow Jones Indices, Federal Reserve Bank of St. Louis, Bureau of Labor Statistics, Gas Buddy
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