In the first installment of my review of the Trump versus Biden economy going into this election I began by discussing just how difficult it is to try to understand all of the claims made about the economy by the various candidates seeking office, especially the two candidates for President. It isn’t just the fact that each party only tells you the facts they want you to hear, and try to hide the facts they don’t want you to know.
There’s also the fact that economics is a pretty difficult subject to study even if economists didn’t measure some factors on a weekly basis, some on a monthly basis, some quarterly and some yearly. So I’m going to try to put it all together in some sort of sensible format for you to make up your own mind. I hope I’m going to be fair, at any rate I’m going to try; you’ll have to judge.
Last time I described how inflation under Joe Biden hit a level higher than it had since the 1980s; this is the economic problem that the Republicans want you to remember. That high level of inflation however was really caused by the US coming out of the covid-19 pandemic, it lasted less than one year and inflation is now pretty much under control.
At the same time I also described how Covid was responsible for Trump’s biggest economic failure, an unemployment rate that topped out at 15%, the highest unemployment since the Great Depression of the 1930s. So it is that with respect to both inflation and unemployment the economic record of Trump and Biden are pretty equal, and that both of their records have been overshadowed by the effect of Covid, a disease that came out of nowhere to kill almost one and a quarter million Americans. The lesson to be learned here is that even the President of the United States has only so much influence over our economy, and that forces beyond the control of any President or party, like a pandemic, can wreck even the best laid plans of mice and men.
In this post I’ll continue to describe how both Trump and Biden performed on other economic factors such as job growth, wage growth, and GDP. Once again all of the economic numbers I’ll be using have been adjusted for inflation where appropriate.
The Democrats love to remind everyone of how President Biden has created more jobs than any President ever in our nation’s history while under Trump the US saw a net job loss. That’s literally true but again those facts are more due to the Covid pandemic than by any actions taken by either Trump or Biden. If you look at the Chart below it’s obvious that job growth was puttering along at about 200,000 per month under Trump until April of 2020, just as the pandemic began to rage. In that month 20 million jobs were lost, which is why the line for job growth drops out of the bottom of the chart.
Then, during Biden’s first year in office the pandemic waned and companies started hiring back all of the people they’d laid off. That’s a big reason why job growth under Biden was about twice what it was even during Trump’s good years. So again with respect to job growth we have a strong economy no matter who is President and while it did take a big whack from Covid it has come back quite nicely.
Taking a quick look at the growth in our nation’s Gross Domestic Product (GDP) we see much the same story. For the first three years of Trump’s term GDP growth was a stable and reasonable 5%, as measured on a quarterly basis. Then came Covid and the economy took a sharp drop, in fact the country was technically in a recession, which is defined as two consecutive quarters of negative growth.
When Biden took office things got dramatically better with the second quarter of 2021 actually having a growth of 17%! Thereafter things settled down again but GDP growth for Biden has remained above 5%. Still however we have to ask, were Biden’s good GDP figures due to our recovery from Covid. Taking away the effect of the pandemic both Presidents can claim to have had reasonable economic growth.
Finally I’d like to take a look at how wages rose, or fell during the Trump and Biden administrations. This is important because, as I said in my last post, if wages rise faster than inflation then people are actually better off but when wages don’t rise at least as fast as inflation that’s when everybody starts to feel the economic pinch.
Just looking at the chart by itself it certainly looks like wages increased a lot more under Biden than they did under Trump. Again however it must be remembered that inflation was also higher under Biden so was there really any great difference?
Really the one thing that can be said about the state of the economy under either Trump or Biden is that the performance or policies of any President have only a minor effect while things outside of their control, like a pandemic, can have a much greater effect. Now you may have noticed that I’ve been comparing Trump’s economy to Biden’s, but it’s actually Vice-President Harris who is the democratic nominee in 2024. Of course Trump has been tying Harris to every one of Biden’s problems in his efforts to make her look bad and certainly as Biden’s Vice-President Harris went along with Biden’s policies.
Still Kamala Harris is her own candidate. For that reason in my next, and last post of this series I’ll be taking a look at the proposed policies of the two candidates Trump and Harris so that you can make up your own mind whose economic vision is more in line with yours.
Before I go however let me just give a brief overview of our economy at just this moment a little more than a month before the election. Inflation in August was 2.5%, a little bit more than we’d like. Unemployment is at 4.2%, again we’d like that to be lower, but it’s really pretty good. GDP in the second quarter, April to June, was a sold 3% indicating strong growth in our economy. At present then the US economy is strong, true it could be better, but it could also be a lot worse!
Perhaps the best way to gage our economy however is to take a look at how the stocks markets have been performing so far this year. Since the end of September of 2023 the DOW Jones Industrials have climbed 26%, the Standard and Poor’s 500 has climbed 33% while the tech heavy NASDAQ has beaten them both with a 37% gain in just one year. Obviously our economy isn’t too bad!
Postscript: The latest job figures have come out for September. This will be the last data point for jobs before the November election. In September the US added 254,000 jobs, many more than economists had estimated. That’s a quarter of a million people who are now working! Because of that high job growth unemployment dropped to 4.1%, a very low value. All in all, it points to a very strong economy that has fully recovered from the pandemic!