The economy will likely be a hot-button topic during Thursday night’s debate between President Joe Biden and former President Donald Trump, with Biden emphasizing the U.S.’ strong recovery during his term and Trump attacking Biden-era inflation—but the truth lies somewhere in between both candidates’ lob shots as each president navigated the unprecedented effects of the COVID-19 pandemic.
Trump, left, and Biden debate in 2020.
GDP: The country’s economic output grew strongly under both Biden and Trump, with real gross domestic product, which tracks the inflation-adjusted value of all goods and services produced by the U.S., expanding at an annualized rate of 2.7% during Trump’s first three years and 3.5% during Biden’s. The Trump economy’s annualized growth rate of 1.4% over his full term is weaker, though that includes 2020’s COVID-19 shock, while Biden-led growth is concentrated in 2021 at 5.9%, slowing to 1.9% and 2.5% in 2022 and 2023.
Stock market: Stocks performed better under Trump, though both presidencies coincided with stronger-than-average gains—the S&P 500 index has posted an annualized gain of 10.8% since Biden took office in 2021, compared to 14.1% under Trump (and there most certainly hasn’t been the stock market crash under Biden that his opponent forecasted in the 2020 race).
Inflation: Inflation has been far worse during the Biden administration, up 19.9% over the first 41 months of Biden’s term compared to 5.4% during Trump’s first 41 months, according to the government’s consumer price index. Year-over-year inflation peaked under Biden at a four-decade high of 9% in 2022 before falling to just over 3%—which Biden has blamed on COVID-19’s lingering impact and the Russia-Ukraine war.
Job market: Both Biden and Trump oversaw strong labor markets. Since Biden took office, overall employment is up 11%, average pay is up 17% and unemployment is down from 6.7% to 4%. It’s particularly a sign of strength that job growth and sub-4% unemployment have coincided with interest rate increases and a subsiding in inflation, both of which typically hurt the labor market. Perhaps Trump’s most impressive labor market feats were unemployment declining from 4.7% to as low as 3.5% in late 2019 and early 2020, which tied its lowest level since 1969 and wages growing by an inflation-beating 15% over his four-year term.
The COVID jobs asterisk: Much of the Biden labor market gains are part of the post-pandemic recovery, as unemployment was just 3.5% in Feb. 2020 and the number of employed Americans is up only 4%. Biden has largely focused on the Covid-skewed data points, and Trump’s labor market performance depends strictly on the cutoff date, as the COVID-19 disruption undid much of the nominal progress, sending unemployment briefly to an all-time high of 14.9% in April 2020 and causing the overall workforce to actually shrink from Dec. 2016 to Dec. 2020.
Consumer health: Consumer sentiment was lower last month than it ever was under Trump, according to the University of Michigan’s widely tracked survey as Americans continue to feel the aftershocks of inflation despite strong headline economic growth numbers and a record stock market. April’s 3.6% personal savings rate, which measures the percentage of Americans’ income left over after expenses and taxes, was less than half of April 2019’s 7.7%.
Gas prices: The average cost of a gallon of gasoline dipped from $2.37 to $2.28 from Dec. 2016 to 2020, rising to $3.58 by last week, according to the Energy Information Administration—but gas prices rose to an all-time high of over $5 per gallon in 2022 shortly after Russia’s invasion of Ukraine caused energy prices globally to spike, as the U.S. and its allies vowed to not buy oil from Russia, the world’s third-largest oil producer.
Federal debt: The federal government’s national debt of $34.75 trillion is 25% higher than the day Biden took office, after rising 39% during Trump’s presidency, up from $19.95 trillion in Jan. 2017—with the U.S. running a total deficit of $5.85 trillion from its 2021 to 2023 fiscal years, compared to $2.43 trillion from 2017 to 2019 and a record $3.13 trillion in 2020 alone.
The economy is the top issue named by voters ahead of the November presidential election, according to many polls. Research also indicates Americans have more belief in Trump to oversee the economy, with Biden earning the lowest confidence to do the right thing for the economy of any president since George W. Bush in 2008 amid the Great Recession, according to a Gallup survey. The shaky trust comes even as the Biden Administration has touted the achievements under his presidency, such as all-time high stock prices, GDP growth and the success of policies like his CHIPS act which predated the artificial intelligence boom.
Trump and his allies have dismissed the Biden era job gains as being “virtually 100%” the result of illegal immigration, which is false, but the American-born workforce has grown a less stark 2.2% under Biden, compared to 16.2% growth for the foreign-born American workforce, many of whom immigrated legally. Misinformation has also made its way into inflation discussions. Trump incorrectly claims the past few years pose the worst inflation the U.S. has ever dealt with and total inflation runs at almost 50% under Biden, both of which are nowhere close to true. The Biden camp has also mischaracterized inflation, as Biden recently asserted he came into office with 9.1% inflation (annual CPI inflation was 1.4% in Jan. 2021).
Voters usually punish presidents when the economy is poor and reward presidents when the economy is strong, but no matter who sits in the Oval Office, their actual power over economic conditions is limited. The pandemic-era recession and post-pandemic inflation binge were both worldwide phenomena. And while both Biden and Trump have touted lower gas prices at various points, the price often has more to do with supply and demand than government policy. Most importantly, the real kingpin of economic growth and inflation arguably isn’t the president—it’s the Federal Reserve chair.
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