A top obstacle to Democrats in the 2024 election is that voters are unhappy with the economic stewardship of President Joe Biden and Vice President Kamala Harris, the Democratic presidential nominee.
For much of Biden’s presidency, consumer sentiment was as bad as it was during the worst days of the Great Recession following the 2008 financial crisis, according to the University of Michigan Surveys of Consumers. Over the course of his tenure, the sentiment index has averaged just under 81%. By comparison, it averaged nearly 93% under former President Donald Trump — even though Trump presided over the pandemic recession.
Now, it’s no mystery why the public isn’t happy about the economy or Biden’s record: Prices have risen 20% since he came into office. The spike in inflation on his watch will define his economic legacy.
But the extent of unhappiness about the economy has surprised economists and political analysts. Democratic partisans point out that Biden has overseen a number of strongly favorable trends, such as robust employment growth and relatively strong economic output. On those scores, arguably, he’s outdone Trump.
But one complicating factor — the asterisk that applies to the end of Trump’s term and the beginning of Biden’s — is the pandemic and the shutdowns and restrictions that followed it. That world-altering event broke almost all economic data series and made it difficult to make meaningful comparisons between the two.
Sifting through the records of Biden and Trump requires going beyond the headline numbers. Here are some notable trends and developments.
Gross domestic product
Gross domestic product, a summary statistic of output for the entire country, is a metric favored by economists for measuring economic growth.
GDP is reported by the Bureau of Economic Analysis and is generally expressed as an annual rate of growth, adjusted for seasonal variation and for inflation. From the end of 2016 to the end of 2020, annualized real GDP growth was 1.85%.
Under Biden, with two quarters left to go, GDP has grown at a 3.24% annual rate.
Clearly, Trump looks worse in terms of GDP. But a big part of the inferior performance was the pandemic. Trump’s record looks worse because of it, while Biden’s looks better.
One possible way to correct for the distortion is to exclude the pandemic years — both 2020, which saw the initial crash, and 2021, which was boosted by the reopening. From 2017 through 2019, GDP growth averaged a 2.82% annual rate. From the end of 2021 through the second quarter of 2024, the equivalent rate was 2.26%. So, Trump partisans could argue that his record would be favorable to Biden’s without the pandemic.
Jobs
At first glance, Biden blows away Trump in terms of job creation. During Biden’s tenure, payroll employment has grown by 15.8 million through September, according to the Bureau of Labor Statistics. In contrast, payrolls shrunk by 2.7 million on Trump’s watch.
Yet the comparison is not nearly as simple as that. The job losses during the Trump era were largely temporary separations caused by pandemic disruptions. Similarly, much of the job growth during Biden’s tenure was simply people rejoining their employers as the economy began reopening.
Even so, the job growth under Biden has been stronger than might have been expected. As an example, in January 2020, before the pandemic struck, the Congressional Budget Office estimated that payroll employment would total 155 million in the third quarter of this year. In reality, employment has exceeded 158.5 million. So it’s not fair to say that the job growth under Biden has merely been a reflection of the pandemic reopening.
Another way of comparing the two presidents is to look at the total employment rate — that is, total employment as a share of the population.
Before COVID-19, the employment rate rose throughout Trump’s term, which is probably a major factor in voters’ positive memories of that time. The employment-to-population ratio hit 61.1% in February 2020, on the eve of the pandemic, the highest such rate since the 2008 financial crisis. Under Biden, the ratio has come close but never regained that level, maxing out at 60.4% in November of last year.
Both Trump and Biden, though, must be judged in the context of long-running demographic changes that are lowering employment rates. The most prominent is that the population is aging, and with every year, there are more baby boomer retirees who do not want jobs.
Looking at just the “prime-age” population, meaning the age group not likely to be in school or in retirement, ages 25-54, the employment-to-population ratio maxed out at 80.6% under Trump, in January 2020. Under Biden, it has gone higher still, reaching 80.9% in the most recent reading.
In the past, presidents have capitalized on job growth that occurred on their watch. Ronald Reagan’s famous “Morning in America” ad boasted about record employment. But Biden has not been able to use his track record on job creation to his advantage, in large part because it has been accompanied by bad inflation.
“Even in situations where we have strong economic indicators like a low unemployment rate or rising wages, inflation kind of cancels that out, and that leaves consumers to be pessimistic about their financial situation,” said Chip Lupo, an expert for WalletHub.
Income growth
Comparing income growth under Trump and Biden is especially difficult because of pandemic distortions and the subsequent high inflation.
The bottom line is that it appears that, pandemic aside, inflation-adjusted income growth was strong under Trump and has also been strong under Biden — but some people have been left behind as prices have soared.
To back up, real earnings growth accelerated under Trump as the unemployment rate plumbed lows not seen in decades and employers competed to hire workers. Then, the pandemic struck and millions of low-wage workers were laid off as restaurants, hotels, bars, and other businesses were closed. Paradoxically, this caused measured average earnings to soar in 2020 — because low-wage workers were taken out of the denominator. In other words, the “typical” worker looks a lot richer if you remove all the low-wage workers from consideration.
Similarly, real average earnings have fallen over the course of Biden’s tenure — but that’s because he took office as those same low-wage workers were being hired back. After employment rates recovered, average earnings began rising again.
Even though inflation has been high during the Biden years (more on that below), earnings growth has outpaced inflation. Real median hourly earnings are above where they were in January 2020.
It could easily be argued, though, that real earnings growth has been slower than it should have been, or worse than under Trump. Republicans on the Joint Economic Committee, for instance, have noted that if earnings grew at the same pace that they did during the pre-pandemic Trump years, they would be nearly 3% higher today.
Yet there’s another factor that significantly complicates comparisons of the Trump years to the Biden record. That is that the government implemented massive relief measures, including stimulus checks, in 2020 and 2021, contributing to spikes in incomes, which subsequently reversed.
Real per capita disposable income — that is, total income from all sources minus taxes — grew by 24% under Trump. Considering just the pre-pandemic months, though, it was more modest: 8.9%.
Conversely, it has fallen by 4.4% under Biden. Since June 2022, though, it has grown at 8.8%, nearly the same as the nonpandemic Trump record.
Ryan Sweet, the chief U.S. economist for Oxford Economics, said real disposable income was a key indication of financial health, as it demonstrates households’ ability to spend — which in turn drives much of the overall business cycle. It also provides a sense of the resources that families have to keep up with debts, such as mortgages and car payments. “When you’re thinking about firepower for consumer spending, that’s the key thing,” he said.
To sum up, then: By this measure, households did very well in the Trump years and then found themselves surprisingly flush during the pandemic. The stimulus-induced highs of the COVID era waned under Biden, but the trend has otherwise been almost exactly the same as it was under Trump, even accounting for inflation.
Stock market performance
The bottom line is that stocks performed better under Trump than they have under Biden, although markets did well during both presidencies.
The Trump era was certainly good for stocks, even though it included a major crash during the pandemic. Markets cratered when the virus hit in the spring of 2020, but they’d recovered by late summer.
Overall, the S&P 500 was up 65% during Trump’s time in office. It was up 48% under Biden through early October.
Strong market performances under both presidents have boosted workers’ retirement savings. The average 401(k) balance grew 31% from the end of 2016 to the end of 2020, according to Fidelity, finishing at $121,500 as Trump wrapped up his term. It’s further grown to $127,100 through the second quarter of this year, a little less than 5% (over two fewer quarters).
Yet it’s worth noting that stock gains benefit higher-earning households more than they do poorer workers, who are less likely to own shares in companies.
Inflation
Prices were much more stable under Trump than Biden. This is probably the factor that has hurt Democrats more than anything.
“In the end, I subscribe to the idea of Occam’s razor in explaining why voters are downbeat, why perceptions of the economy are more pessimistic now than in the Trump administration or prior years — [it] is inflation and interest rates,” Sweet said.
The consumer price index rose 7.7% for the 48 months Trump was in office, from January 2017 to January 2021.
It rose 19.9% in the first 44 months of Biden’s tenure.
To be sure, Democrats argue that Biden has tamed inflation. It is true that the rate of inflation has fallen. It peaked at nearly 9%, year over year, in mid-2022, as the Russian invasion of Ukraine pushed up energy prices, supply chains were strained by the pandemic reopening, and the Biden administration doled out pandemic relief. It has fallen to a 2.4% rate in the latest reading.
But families and voters don’t care about the rate of inflation in a given month. They care about the fact that they’re paying more at the grocery store and gas pump and that the costs of some big-ticket items, such as houses and cars, have soared during the time Biden has been in office.
The fact that prices have risen for necessities, such as food, shelter, and energy, has been particularly hard for low-income families, many of whom are increasingly relying on credit for necessities, Lupo said.
Here are a few relevant points of comparison:
Groceries
The cost of food at home rose 6.5% under Trump, according to the CPI. It is up 21.6% under Biden.
To use another data source: The weekly grocery bill for a non-thrifty family of four, two parents with two young children, measured by the U.S. Department of Agriculture rose 5.8% under Trump, from $250.40 to $264.90.
It has risen 18.8% under Biden so far, to $314.70.
Gas prices
Gas prices have been significantly higher under Biden.
The price of a gallon of regular gas averaged $2.41 during Trump’s time in office, according to Energy Information Administration data.
Under Biden, it has averaged $3.37.
Overall energy prices, a category that includes fuels and electricity, are up nearly 30% under Biden. They rose just 2.3% under Trump.
Shelter
Shelter prices in the CPI rose 11.8% under Trump and 22.7% under Biden.
Shelter costs reflect both rents and home prices. Home prices rose 28% under Trump, and then soared another 38% under Biden, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Index.
Interest rates
Interest rates were milder while Trump was in office, making it easier for families, especially income-constrained families, to finance purchases of big-ticket items and avoid getting caught up in credit card debt.
Interest rates, which represent the price of credit, are not included in the CPI or other prominent inflation measures. But voters see interest rates as part of the overall cost of living. And recent economic research authored by Harvard University economist and former Treasury Secretary Larry Summers found that higher borrowing costs explain much of the low readings in consumer sentiment.
The average rate on a 30-year, fixed-rate mortgage averaged just under 3.9% during Trump’s tenure. It has averaged just over 5.4% in Biden’s time.
Combined with soaring house prices, the result has been that homebuying has fallen out of reach for many families. Getting a mortgage and buying a home is more than 50% more expensive now than during the Trump years. When Trump left office, the monthly payment on a mortgage for a typical home, including principal and interest, was $1,076, as calculated by the Federal Reserve Bank of Atlanta, assuming a 10% down payment. The corresponding payment in the most recent month was $2,309.
Buyers now need an income of $115,000 a year to afford the typical home with a 15% down payment, according to Redfin. That’s well above the median household income.
Similarly, the average rate on a 48-month auto loan from a bank averaged 5% under Trump versus 6.7% under Biden, according to Fed data.
Credit card rates averaged 14.2% under Trump and 18.1% under Biden. They are 21.76% in the most recent Fed report.
Still, delinquency rates have fallen on all types of debt in the Biden era, thanks to relatively robust disposable income growth. In particular, almost no student loan borrowers are falling behind, thanks to pandemic-era relief programs that suspended interest collections and Biden administration forgiveness programs.
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The bottom line
It’s difficult to compare the Trump and Biden economic track records because of the unique circumstances created by the pandemic. But it appears that, on balance, voters do not hold Trump responsible for the hardships created by the COVID-19 shutdowns — but they do blame Biden for the high inflation of the past few years.
Still, Sweet warned that only so much can be inferred from the aggregate data. “There’s people behind these numbers. People up and down the income distribution are faring differently,” he said. “That’s why it feels like a recession to some, whereas others feel like it’s the best economy in recent memory.”
Joseph Lawler is policy editor of the Washington Examiner.
This article was originally published at www.washingtonexaminer.com
