What the numbers show on the economy Trump handed Biden
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Photo illustration: Aïda Amer/Axios. Getty Images photos: Brendan Smialowski/AFP and Jim Watson/AFP
Thursday night's debate will be remembered for President Biden's disastrous performance. But it also laid bare a key theme heading into November: a clash over how good or bad the economy that former President Trump handed off to Biden really was.
Why it matters: Memories fade, but the numbers can give a clearer view of the economic conditions that prevailed the last time Trump was president. The pandemic was a stark dividing line.
- The pre-pandemic Trump economy really was terrific by nearly every measure. But at the start of 2021 when Biden took office, the U.S. economy was more dismal than we may allow ourselves to recall.
- An open debate is whether Biden's approach to dealing with it — the $1.9 trillion American Rescue Plan passed in March 2021 — was necessary to achieve the rapid rebound that occurred, or if that would have happened anyway and ARP unnecessarily fueled inflation.
Flashback: This time five years ago, the U.S. economy was so good that the New York Times was sending economics writers to New Hampshire to try to suss out how Democrats running for president would deal with this dilemma.
- The unemployment rate averaged 3.7% in 2019.
- Inflation was running below the Fed's 2% target and average hourly earnings were rising more than 3%, meaning American workers' real wages were increasing at a comfortable clip.
- With inflation well-contained, the Fed cut rates three times that year, a "mid-cycle adjustment," as chair Jerome Powell called it, that seemed poised to keep the economy on its happy growth trajectory.
Yes, but: By the end of 2020, it was a very different story. The pandemic was still raging, with deaths peaking the first week of January 2021.
- The unemployment rate stood at 6.7% in December 2020, the month before Biden took office. There were 9.3 million fewer jobs that month than a year earlier, and Q4 GDP was 1.1% below 2019 levels.
- In his December 2020 press conference, Powell said that "the current economic downturn is the most severe of our lifetimes. It will take a while to get back to the levels of economic activity and employment that prevailed at the beginning of this year, and it may take continued support from both monetary and fiscal policy to achieve that."
- Congress passed, and Trump signed, a $900 billion pandemic stimulus — a massive action that is easy to forget given that neither Trump nor Biden have seen much reason to talk about it.
The bottom line: In late 2020, people worried we were settling in for a long, slow slog. Biden's policy choices helped achieve a rapid snapback — but contributed to the inflation surge that has made Americans so negative on the economy of 2024.
