How the U.S. Economy Performed During Trump 1.0 and Biden’s Four Years – Currency Thoughts
How the U.S. Economy Performed During Trump 1.0 and Biden’s Four Years
February 11, 2025
Voter opinion poll responses during last year’s presidential election repeatedly listed the “economy” at or near the top of people’s priorities. What they really meant by economy was inflation, but there are several other parameters that comprise a country’s economic performance.
U.S. real GDP growth had expanded at a 1.85% per annum pace during the President Trump’s first term in 1917-1920. Over the ensuing four years when Biden was president, GDP growth accelerated to an annual pace of 3.17%.
Whereas non-farm payroll employment in the United States was 2.715 million workers fewer in January 2021 than when Trump entered office four year earlier, jobs grew by 16.156 million during the four years of Biden’s stewardship. In percentage terms expressed at an annual rate, that translates to jobs growth of -0.5% in Trump 1.0 followed by +3.2% in Biden’s term. If one eliminates Trump’s last year and Biden’s first one due to the distortion of the Covid-19 pandemic, employment growth when Trump was first president (+1.4%) still under-performed the gain of 2.0% when Biden was president.
In an ideal world currency movements will be guided by economic performance. Against the euro, the dollar was 12.1% weaker when Biden replaced Trump on January 20, 2021 than four years earlier. By the time Biden left office last month, the dollar had recouped all those losses and then some, climbing 17.3% in those four years against the common European currency.
The U.S. stock market performed well in the Biden years but did not climb quite as much as during Trump 1.0. With Biden, the DOW rose 39.4%, and the S&P 500 advanced by 55.7%. In Trump’s first stint as president, the DOW and S&P respectively surged 57.3% and 69.6%.
The biggest economic advantage of the Trump years over the Biden years involves inflation. Consumer price inflation averaged 1.9% during Trump 1.0, essentially aligning with the medium-term target of 2.0%. In the Biden years, inflation was 2-1/2 times worse, averaging 5.0% per annum, but only half as high as during the the four-year Carter presidency, when the average CPI inflation rate was 10.3% per year.
The Carter experience has relevance now for two reasons. Then, like now, voter perceptions of the economy were much more keenly influenced by inflation than growth in GDP or jobs. Secondly, inflation didn’t emerge from nowhere on Carter’s watch. The genesis of the problem that time can be traced back to the second half of the 1960s. CPI inflation in the Kennedy era stayed below 1.5% but got as high as 6.2% in December 1969 when Nixon was president and 12.3% in December 1974 when Gerald Ford was the president.
To paraphrase Yogi, inflation ain’t over until its over, which explains why Fed officials plan to take a very cautious approach to additional interest rate cuts. U.S. and global inflation from the mid-60s to the late 1980s came in waves. Carter entered the White House at a lull reacting to a severe prior recession from late 1973 through early 1975. But an inflationary mentality hadn’t been really snuffed out.
In that regard, the Trump economic agenda of high tariffs, tax cuts, and massive deportations risks seeding a future spike in inflation that could flare up on his second watch. One canary in the mine emerged last Friday, when a measure of expected inflation one year out jumped a full percentage point from 3.3% in December to 4.3% in January. Such a big month-to-month change in expected inflation happens rarely. Having promised to restore price stability, Trump will need to avoid a new inflationary wave so soon after the post-Covid one that did in Biden. His trade advisers are convinced that tariffs will not generate inflation this time. That’s a belief that’s not shared by many economists. We’ll just have to see who is correct.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: The Trump and Biden economic records
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