A historic rematch between President Joe Biden and former President Donald Trump is heating up, and the road to the White House may come down to whose economic legacy succeeds at outshining the other.
The majority of Americans (89 percent) say the issue of handling the economy will be an important factor in determining their vote, with two-thirds (62 percent) calling it very important, according to Bankrate’s Biden and Americans’ Personal Finances Survey from November 2023. And for the first time since Grover Cleveland’s comeback attempt in 1892, voters have records of how the two leading candidates managed the world’s largest financial system.
To help Americans compare each president’s economic report card, Bankrate looked at data from Trump and Biden’s time in office on a sampling of economic measures, from hiring and unemployment, to stocks, growth, inflation and federal spending.
Both candidates’ resumes have economic feats worth bragging about, the analysis found. Biden is likely to tout that he presided over a historic job market, with half-century low unemployment and booming hiring. The economy under Trump, meanwhile, grew at nearly the same pace as it did under Biden when adjusting for inflation, even as the latter benefited from a massive post-pandemic boom.
But their records also have some red flags. Trump likely wants voters to blame Biden for the worst inflation crisis in 40 years, while Biden can point out that his predecessor added twice as much to the federal debt.
Whether Trump or Biden should take the blame or credit for the U.S. economy during their tenures in the White House, however, is an open question.
Presidents inherit much regarding the economy when they take office. In terms of the totality of their administrations, both Presidents Trump and Biden were largely able to preside over economies that enjoyed sustained growth and mostly low unemployment.
— Mark Hamrick, Bankrate Senior Economic Analyst
Key takeaways on Trump and Biden’s economic records
- Inflation: Prices have risen 19.3% since Biden took office, almost four times faster than the 5% increase three years and five months into Trump’s term.
- Hiring: Three years and five months into Biden’s term, the U.S. economy has created 15.6 million jobs. That compares with job losses totaling 12.6 million for Trump.
- National debt: Biden has so far added $4.3 trillion to the national debt, while Trump approved twice as much during his full term in office ($8.4 trillion).
- Growth: Since Biden took office, the U.S. economy has grown 8.4% when adjusted for inflation, versus a 6.5% growth rate for the same time period under Trump, though the economy was growing at a similar speed to Biden’s before the pandemic.
- Stocks: Overall, the S&P 500 stock index has risen 42.1% since Biden took office, compared with a 33.6% increase over the same time period for Trump, but stocks rose at a faster pace under the second and third year in Trump’s term than they did in Biden’s.
- Consumer sentiment: Confidence in the economy and Americans’ overall personal financial situations has been slumping under Biden, as inflation stays stubborn and consumers’ paychecks lose ground to price increases.
Prices have risen almost four times faster under Biden
Biden took office on the precipice of the worst inflation crisis in 40 years, an economic narrative likely to work against him considering that two-thirds of Americans (69 percent) say their cost of living has gotten worse since the November 2020 election, Bankrate polling from November found.
Since his inauguration in January 2023, prices have risen 19.3 percent, according to a Bankrate analysis of the latest available Bureau of Labor Statistics data. During Trump’s presidency, prices rose 5 percent between his inauguration in January 2017 and May 2020, nearly four times faster than inflation during the same period. This increase was largely attributed to the economic impact of the coronavirus pandemic, which resulted in a plunge in economic activity and subsequent deflation. However, post-pandemic inflation was also influenced by the large aid packages approved by both the Trump and Biden administrations to help households weather the recession. Research suggests that these aid packages may have added about 3 percentage points to inflation.
Furthermore, Trump added $8.4 trillion to the federal debt during his term, including $3.6 trillion of COVID relief spending. In comparison, Biden has added $4.3 trillion to the national debt so far, with nearly half of that coming from pandemic-era relief programs. Beyond pandemic relief, Trump’s federal spending was also impacted by the Tax Cuts and Jobs Act of 2017, which added an estimated $1.9 trillion to the federal debt over a 10-year period.
In terms of job creation, Biden has overseen the creation of 15.6 million jobs since his inauguration in January 2023, compared to job losses totaling 12.6 million during the same period of Trump’s presidency. The unemployment rate has also fallen to even lower levels under Biden than it did for Trump, dropping 2.4 percentage points during Biden’s term so far. However, these gains are a result of the coronavirus pandemic. The U.S. economy’s fate is often at the mercy of external forces beyond the president’s control, from the impact of the coronavirus pandemic to the Federal Reserve’s rapid rate hikes. These factors can determine whether the economy will steer clear of a recession or fall victim to inflation.
Swift action taken by policymakers to mitigate the effects of the pandemic-induced recession may have inadvertently led to the current inflation crisis. Supply shocks, ultralow interest rates, and substantial fiscal stimulus have all contributed to the worst inflation levels seen in 40 years.
While the Federal Reserve has played a role in taming inflation by slowing down the job market, not all Americans attribute their financial woes to the central bank. A Bankrate poll revealed that only 27 percent of individuals who have not seen improvement in their personal financial situations blame the Fed, while a larger percentage (45 percent) point fingers at President Biden.
According to Meir Statman, a finance professor at Santa Clara University, presidents are often seen as easy targets for economic woes, despite their limited influence compared to other market forces. The blame game often falls on them, whether it be for supply chain issues, high gas prices, or other economic challenges.
In an effort to provide readers with a comprehensive understanding of the current economic landscape, Bankrate conducted an analysis using data from various sources such as the Bureau of Labor Statistics, Department of Commerce, and Standard & Poor 500 index. This analysis compared key economic indicators under President Biden and former President Trump, indexing data to the beginning of each president’s term for an accurate comparison.
Overall, the intricate interplay of factors such as government policies, market forces, and global events shape the economic trajectory of the United States. While presidents may bear some responsibility, the complex nature of the economy highlights the importance of understanding the multifaceted dynamics at play.