As the 2024 US presidential campaign heats up, a central question is emerging: has the US economy performed better under Joe Biden or Donald Trump? Both candidates have made bold claims about their economic achievements. Kamala Harris, the Democratic Vice-President, has stated, “By many indicators, our economy is the strongest in the world.” Meanwhile, Donald Trump insists he built the “greatest economy in the history of our country,” only for the Biden-Harris administration to undermine it. To cut through the rhetoric, let’s take a closer look at some key economic indicators to evaluate the economic performance under both presidencies.
1. Economic Growth: Biden vs. Trump
One of the primary ways to measure economic health is through Gross Domestic Product (GDP), which reflects the total value of goods and services produced in the country. The COVID-19 pandemic disrupted economies globally, making a direct comparison tricky. However, both presidents oversaw notable recoveries post-pandemic.
- Trump’s Economic Growth: During Trump’s tenure (January 2017 to January 2021), the average annual growth rate was 2.3%. This period included both the pre-COVID economic boom and the dramatic downturn caused by the pandemic.
- Biden’s Economic Growth: Under Biden, the economy has continued to recover, with an average annual growth rate of 2.2%. While slightly lower than Trump’s, the Biden administration has steered the US through a robust post-pandemic recovery, with the US outperforming many G7 nations in terms of GDP growth.
Despite both presidents achieving growth, neither can claim to have delivered the “greatest economy in history.” Growth rates in the 1970s, for example, were significantly higher.
2. Inflation: A Rising Concern
Inflation, or the rate at which prices increase, has been a hot topic during the 2024 campaign. Both administrations have had to deal with inflationary pressures, but the situation escalated under Biden.
- Trump’s Inflation: Inflation remained relatively low during Trump’s presidency, but it began to rise as COVID disrupted supply chains. By the time Trump left office, inflation was still under control but on the rise.
- Biden’s Inflation: Under Biden, inflation surged to a peak of 9.1% in June 2022, driven by a combination of factors including global supply chain disruptions, the war in Ukraine, and domestic spending policies. The Biden administration’s $1.9 trillion American Rescue Plan injected substantial cash into the economy, which some economists argue contributed to the rising prices. However, by mid-2023, inflation had eased to around 3%, although this is still higher than when Biden first took office.
Trump has criticized this inflation, labeling it “the worst in US history,” but this isn’t accurate. Inflation in the 1980s, for instance, exceeded 9%, making Biden’s inflation peak notable but not unprecedented.
3. Employment: A Rapid Recovery Post-Pandemic
Job growth and unemployment rates are key measures of economic success, and both Biden and Trump have focused heavily on their employment achievements.
- Job Growth Under Trump: Before COVID, Trump presided over a strong job market, with 6.7 million jobs added in his first three years. However, the pandemic caused massive job losses, and unemployment skyrocketed to 14.8% in April 2020. By the time Trump left office, unemployment had fallen to 7%.
- Job Growth Under Biden: Biden has overseen a historic rebound in job creation, with nearly 16 million jobs added since taking office in January 2021. This marks the fastest job growth in any presidential term in US history, driven in part by the rebound from COVID-induced lockdowns. While many of these jobs would have returned regardless of who was in office, economists credit Biden’s American Rescue Plan for accelerating the recovery.
Unemployment dropped to 3.4% in January 2023, the lowest in over 50 years. However, by mid-2024, it had risen slightly to 4.3%.
4. Wages: Rising But Lagging Behind Inflation
Wage growth is another critical factor in assessing economic performance. While wages have increased under both Trump and Biden, the impact of inflation has tempered those gains.
- Wages Under Trump: Wage growth was steady under Trump, similar to the trend seen during the Obama years. However, when COVID hit, average wages spiked temporarily because lower-paid workers were disproportionately laid off, skewing the data.
- Wages Under Biden: Biden has overseen continued wage growth, but inflation has outpaced these gains. As a result, when adjusted for inflation, real wages have declined slightly since Biden took office. This wage stagnation is a key issue in the 2024 campaign, as many Americans feel that rising prices have outstripped their paycheck increases.
5. Financial Markets: Volatile But Growing
The performance of US financial markets, particularly the Dow Jones Index, is often used as a barometer for economic success. However, it’s worth noting that the stock market doesn’t always reflect the broader economy.
- Trump’s Stock Market: Under Trump, the stock market reached record highs before crashing in early 2020 due to the pandemic. By the end of his term, markets had recovered to pre-pandemic levels.
- Biden’s Stock Market: Biden has also overseen stock market growth, with markets continuing to climb despite volatility. The Dow Jones hit record highs under Biden’s administration, although there have been occasional market dips due to concerns over inflation and interest rates.
6. Government Spending and Debt
One area of contention between the two administrations is government spending. Trump’s 2017 Tax Cuts and Jobs Act slashed corporate tax rates but also contributed to the national deficit.
- Trump’s Spending: Trump’s tax cuts were meant to stimulate the economy, but they also led to a significant increase in the national debt. In addition, the government spent trillions on COVID relief, which further ballooned the deficit.
- Biden’s Spending: Biden’s presidency has been marked by large spending bills, including the American Rescue Plan and the Infrastructure Investment and Jobs Act. While these initiatives were designed to boost the economy and repair aging infrastructure, they have drawn criticism for increasing the national debt.
7. International Trade and Tariffs
Trade policy was a major focus of Trump’s presidency, particularly his trade war with China.
- Trump’s Trade Policy: Trump imposed tariffs on Chinese goods, aiming to reduce the trade deficit and boost domestic manufacturing. While the tariffs disrupted global trade, they also had mixed results for American consumers and businesses, as many imported goods became more expensive.
- Biden’s Trade Policy: Biden has largely maintained Trump’s tariffs on China but has taken a more multilateral approach to international trade, working with allies to address global trade challenges. The administration has focused on strengthening supply chains and promoting domestic manufacturing through incentives.
Conclusion: Biden vs. Trump on the Economy
When comparing the economic performance of Joe Biden and Donald Trump, both presidents can point to significant successes, but their legacies are shaped by different challenges. Trump presided over strong economic growth before the pandemic, while Biden has overseen a rapid recovery from the COVID-19 downturn. Inflation has been a more significant issue under Biden, though it is now trending downward. Both administrations have delivered job growth, with Biden’s tenure seeing the fastest post-pandemic recovery. Ultimately, the choice between the two comes down to voters’ priorities: maintaining the economic recovery or returning to pre-pandemic policies.
FAQs
1. How did the US economy perform under Trump?
Under Trump, the economy grew at an average rate of 2.3%, with strong job growth until the pandemic hit. The stock market reached record highs before the pandemic-induced crash.
2. What is Biden’s track record on the economy?
Biden has overseen a robust recovery from the pandemic, with historic job growth and a decline in inflation. However, inflation initially surged under his administration, and wage growth has struggled to keep pace with rising prices.
3. Has inflation been higher under Biden or Trump?
Inflation surged to a 40-year high of 9.1% under Biden in 2022, but it has since dropped to around 3%. Inflation remained relatively low under Trump until the pandemic disrupted global supply chains.
4. Did wages rise under Biden?
Yes, wages have risen under Biden, but inflation has eroded much of the gains, leaving real wages lower than when he took office.
5. How have financial markets performed under Biden and Trump?
Both presidents oversaw stock market growth, with record highs reached under both Trump and Biden. However, the market crashed during the pandemic and recovered under both administrations.