So, I keep seeing it come up about how great the first Trump economy was. And, I will admit that the first three years were fine if not good. They were not radically different, I would note, from the economic indicators during the second Obama administration. This is something I recall discussing at the time. My point, to be clear, is not to say that the pre-Covid Trump economy was bad, but to note that it was hardly remarkable.
I would note that any real assessment of Trump’s first terms should include all four years. There is no reason to give a president a pass just because a crisis occurs insofar as how that crisis was managed has to be part of the assessment. But having said that, I will mainly look at just the first three years as part of the discussion below.
One thing is definitely true: inflation under the Biden administration is clearly the worst we have seen in some time. So, if that is what one means by “the economy” then the Biden economy was worse than the Trump economy. But, it is also true that inflation was good prior to Trump. It is impossible, in fact, the attribute the inflation numbers from 2017-2019 to Trump policies. Wages are also up under Biden far moreso than under Trump.
As a general matter the point of all of this was 1) to confirm my own memories of the numbers, and 2) to lay out the actual evidence. Please note: I understand that that voters on a mass level are responding mainly to inflation and not other macro-economic indicators. I understand that and even understand why.
But when it comes to a reasoned, fact-based argument between individuals, the evidence is pretty clear that the Obama second term economy and Trump’s first three years are pretty much part of the same general economic era, and that Trump policies likely had little to do with it. Certainly, the general trends were already in place. And, apart from inflation, the Biden economy has been good, much of which can be linked to policy choices implemented to deal with the global economic effects of the pandemic.
If someone can point back, based on data and evidence, how we are going to return to the Trump levels via policy, I am all ears.
I will also note that if one thinks that the Trump economy was great, one ought to have a similar view of the second Obama administration. Clearly, Obama’s first term was marked by having to inherit the Great Recession in progress. This also underscores a key issue when it comes to evaluating presidents: what they inherit matters. Obama inherited the Great Recession. Trump inherited a healthy economy with trend lines going in the right direction. Biden inherited the country in the middle of a global pandemic. Trump is, again, inheriting an economy in good condition with the trend lines going in the right direction.
Anyone who wishes to assert that they are only making fact-based, empirical assessments of presidential performance has to take all of this into account.
On to the data.
The first set of data shows the average annual rates of inflation, GDP growth, and unemployment for Obama’s second term, Trump’s first term, and Biden’s first three years (unemployment is up through October of 2024). I have also included Trump’s first three years to isolate the Covid year for comparative purposes.
| Obama2 | Trump1 | Trump Only 3 | Biden | |
| Inflation | 1.13% | 1.88% | 2.10% | 5.60% |
| GDP Growth | 2.35% | 1.42% | 2.63% | 3.43% |
| Unemployment | 5.50% | 4.58% | 3.87% | 3.53% |
If we compare Obama2 to Trump Only 3, we see that Trump had worse inflation, slightly better growth, and better unemployment rates. But, they aren’t really that different. Also, as noted below, the unemployment trend lines started downward before Trump came into office.
I wold note tht unemployment and growth are better under Biden versus even Trump Only 3.
I will note, however, that perceptions of the economy are often directly associated with partisan affiliation. Note the following chart from Pew Research in terms of GOP perceptions of Obama2.
But what about wage growth? I have seen it asserted that wages grew especially well under Trump. But this graph from the Federal Reserve Bank of Atlanta suggests that during the Trump administration, the trend was relatively flat, if slightly up in the later years. But the fluctuations were in a range that existed pre-Trump. And, of course, along with inflation, wages are up under Biden.
Here’s a similar graph from the Economic Policy Institute.
More wages from the Federal Reserve of St. Louis.
All combined you can see some improvement in Trump1 better than Obama2. But it is nothing dramatic. Certainly not enough to declare it some special period of wage growth. And, again, there has been substantially more wage growth under Biden.
See, also, CAP: Americans’ Wages Are Higher Than They Have Ever Been, and Employment Is Near Its All-Time High. The piece has a number of additional charts and graphs. I will share just this one, which is toggle to show the post January 2021 period.
Here is the annual GDP from 2008-2023 (World Bank).
To return to unemployment, note the trend line from Obama2 into Trump1.
For kicks, here’s the DJIA over time. At a minimum, it is hard to say that stocks suffered under Biden.
Also, here are gas prices (source: Department of Energy). The blue line was the nominal price and the yellow is in constant dollars. Of the things to note include that the basic gas or price during the Trump administration pre-Covid started, you guesed it! during Obama2. And, of course, the low point was during the pandemic.
As usual, we find out out that adjusted for inflation, gas isn’t even at an all-time high. Of course, I know it is impossible to get the general public to thinking those terms.
Here are the monthly numbers from 2013 to now (unadjusted), which really underscore the pandemic issue.
If you look at April and May of 2020, during the height of the lockdown, gas was under $2/gallon. Spoiler alert: barring another global economic catastrophe, those numbers aren’t coming back.
But if you want to play silly games, gas was cheaper during most of 2016 than it was during 2017. Was that because Obama was some kind of economic genius? Or might it have something to do with the global market for oil? Indeed, I see that in January of 2016, it was sub-$2/gallon!
So, what’t my point?
One, here are a lot of details. This isn’t just vibes, headlines, or op/eds. Indeed, this hits the whole “news bubble” discussion in its own special way: it is just data.* (That is, most people rely on others to provide the data and the interpretation). I don’t see, in the data, anything that was spectacular about the Trump1 economy in his first three years that justifies an empirical argument about its superiority. I definitely don’t see anything in the numbers to justify voters ignoring things like January 6th, not to mention a host of other issues in asserting how great his administration was.
Two, I do understand how inflation rates, and the pandemic in general, generates nostalgia.
There is a difference between an evidence-based argument and nostalgia.
At this point, there is no doubt in my mind that a major explanation for Trump’s success at the ballot box is inflation-driven anti-incumbency. So, I am clearly not arguing that economics don’t matter. I will note, however, that prices aren’t coming down because he was elected.
Three, wages are also up. And I don’t see how saying the wages were up under Trump is a persuasive comparison.
Look, I fully understand the election is done. Further, I am open to a reasoned, evidence-based argument over what I am missing. But at the end of the day, I do not see evidence that the Trump economy was some Nirvana worth returning to (nor that it was unique). And that is separate from the question of what policies supposedly created the alleged Nirvana in the first place.
I certainly see nothing from the past that indicates he will do anything special to make the economy better. Either he will do a lot less of what he has promised, and will coast on what he inherited. Or if he does what he promises, wreck what was handed to him (especially tariffs and mass deportations).
On the margins, tax cuts for corporations and cutting regulations may enhance profits and keep the DJIA churning upward (note, however, it is at a record level now, so it isn’t like these things are stagnant). However, history has demonstrated that such outcomes don’t trickle down as promised.
I do not expect gas prices to deviate significantly from where they are. Oil production in the US is already at an all-time high. We are the
Indeed, United States produces more crude oil than any country, ever.
Ok, that’s enough!
I will conclude as follows. I am not arguing that the Trump economy pre-Covid was bad. I agree that it was basically good. But it was of a piece with the Obama second term economy. It was not extraordinary. It was relatively normal. And while I understand the power of nostalgia, the data doesn’t back up the notion that it was anything other than as described.
Inflation is the one difference (but, again, the inflation numbers predate Trump). So while I see how that clearly affected the electoral outcome, no one can argue that Trump can return prices to where they were. And, note that the inflation rate is already back to acceptable levels, so he inherited that.
*BTW, I know that CAP is left-leaning. But the issue for anyone who wants to use that position to dismiss the data, you have to tell me why the data are wrong.
