The Trump Biden Rematch (2024)

The Trump Biden Rematch (1)

2024 Elections

The Trump and Biden Economies by the Numbers

Approaching the November presidential rematch between incumbent President Joe Biden, a Democrat, and his predecessor Donald Trump, a Republican, the two candidates are already drawing distinctions over their economic records. And there are surely fundamental differences between them.

But any broad comparison is complicated by the huge disruptions at the onset of the COVID-19 pandemic in early 2020, which triggered two of the most extreme quarters of economic contraction and growth in U.S. history, followed by a bout of inflation reminiscent of the 1970s.

Should Trump be blamed for a collapse in output that rivaled the Great Depression? Should Biden get credit for millions of jobs created in 2021 that were largely a pandemic rebound? Below, a look at key measures of economic performance - from growth overall to the labor market, from tariffs to tax collections - that illustrate the contrasts and similarities between the economies under both.

Drawing of robots working in factory

Overall Growth

The broadest measure of an economy’s performance is annualized growth in gross domestic product, a figure that counts every widget produced, every meal served, and every dollar spent by the government to measure changes to the country’s overall output.

There are reasonable debates about what it really means and how it is distributed, but GDP is one of the main economic scorecards: Generally speaking, the faster it grows, the healthier the economy. As with many of the broader statistics, what may be more interesting is how similar the Trump and Biden economies look.

Quarterly growth during Trump’s first three years, up to the pandemic, and Biden’s term beginning in 2021, compounded at an almost identical rate that annualizes to around 2.7%. Excluding Biden’s first year, arguably still influenced by the pandemic, it was a slower 2.3%.

The Biden economy rode a pandemic-era consumer spending boom; Trump’s economy saw slightly larger average contributions from business investment.

Chart showing change in gross domestic product and consumer spending and private business investment as a share of GDP

Trump made tax cuts a centerpiece of his administration. Biden pushed through some modest tax increases and has proposed even more aggressive actions. Yet federal government collections have been mushrooming in spite of Trump’s tax reductions and beyond the tax increases under the current administration.

Even after adjusting for inflation federal tax collections have been rising.

Against expectations, the pandemic era became one of fast wage hikes and high corporate profits, linked at least to some degree to federal household and business support programs, as well as to high inflation. Tax receipts followed.

Chart showing tax receipts

Chart showing receipts on personal and corporate income tax

The flipside to GDP is Gross Domestic Income, an estimate of what people and companies earn in return for inventing, producing and selling all those widgets and services. How it should get distributed is a perennial debate in U.S. politics.

Trump may have stocked his cabinet with Wall Street allies and boasted of tax cuts for business, but companies took a larger share of GDI under Biden; the share for workers stayed fairly constant.

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drawing of shoppers at shopping mall

Prices and Products

As the health crisis eased, what had been a broad focus on keeping families and businesses financially intact shifted to the emerging problem of inflation, which spiked to levels not seen since the 1980s. Republicans and Democrats will spar mightily over the reasons, and over the significance of its decline alongside U.S. Federal Reserve rate hikes.

Just as many economists agree the pandemic response skirted a potential economic catastrophe – a huge benefit – inflation to some degree represented the follow-on cost.

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Prices increased fast for basic goods, posing a particular hardship for lower-income families.

Chart showing overall inflation and inflation for food and shelter

It may take years to understand how the pandemic changed the economy, but it was a volatile time for both good and bad reasons. On the downside, inflation erupted, seen as a combination of snarled supply chains and record federal deficit spending that began under Trump and continued under Biden, fuelling consumer demand.

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On the plus side: Business starts jumped and were sustained through Biden’s term. At first it was considered a response to the health crisis, motivated by people wanting more control of their environment and their earnings. But the change has persisted to the point some economists see a revival of entrepreneurialism.

Chart showing new business starts

Worried about a depression-style collapse, Congress approved trillions of dollars in payments to households, pumping up bank accounts with disposable income that consumers used freely first to buy goods and then later on “revenge” spending on services like eating out and travel that were unavailable during the pandemic. Over time inflation caught up and eroded some of that purchasing power.

Chart showing disposable income

One policy both Trump and Biden shared is the use of tariffs to curb U.S. trade with China, whether on a broad basis or applied to targeted goods, in the case of Biden, like electric vehicles. Alongside a broader rearrangement of global trade following the pandemic and the Russian war against Ukraine, the tariffs have lowered China’s direct share of U.S. imports. Mexico is now at the top.

Chart showing US trade with Mexico and China

Drawing of construction workers on a construction site

The Landscape for Workers

One thing the Trump and Biden economies shared is a strong labor market. The jobless rate was 3.6% at the end of 2019, before the pandemic; it has gone as low as 3.4% under Biden and until May had been below 4% for more than two years.

Regardless of who’s in the White House, and whether it is for demographic or other reasons, the U.S. seems to have slipped into a period of sustained demand for workers, with a pandemic rebound that surprised even the most seasoned economists.

Chart of unemployment rate including black and white unemployment rate

Filling jobs requires bodies, and for years after the 2007 to 2009 recession economists felt the U.S. labor force was forever scarred. There are demographic limits in an aging population. But economists are realizing that strong job markets, if they last long enough, do pull workers from the sidelines and into employment.

One key difference: Rising immigration under Biden allowed job growth to continue at a higher level than it might have otherwise, absent higher wages.

Chart showing labor force and native and non-native US workers

Wage pressure was a key feature of the pandemic economy, with its “Great Resignation” of workers. Amid a shuffling of occupations and tales of labor shortages, the strongest wage gains went to the lowest paid occupations.

Chart showing wage growth include the top and bottom 20 percent of earners

The U.S. economy is a big ship that’s hard to turn, but presidential decisions do matter. Biden ramped up antitrust enforcement, for example. Trump’s administration thought tax cuts would boost private investment, and economists feel it did at least in the short term. Biden, by contrast, has steered public investments to what are seen as strategic industries and infrastructure.

But counter to their positioning as polar opposites, they’ve both embraced big deficits, overseen historically low unemployment rates, imposed tariffs on Chinese goods, and seen stock markets hit record highs on their watch.

drawing of squirrel and dog

Note

Monthly data current through May 2024; Disposable Income as of April 2024; Quarterly figures through Q1 2024; Wages as of March 2024

Sources

U.S. Bureau of Labor Statistics; U.S. Bureau of Economic Analysis; U.S. Census Bureau; U.S. Treasury Department, Federal Reserve Bank of St. Louis; Federal Reserve Bank of Atlanta

Edited by

Dan Burns

The Trump Biden Rematch (2024)

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