The signs of weakness we see now from the end of Biden's era

Some of you really didn't like a line from Neil's weekend piece on the emergence of stagflation risk: the assertion that President Trump "inherited a shakier economy than it seemed."

• We stand by the assertion.

What they're saying: "Shame on you," wrote an Axios reader named Bev in an email, one of many we received along these lines.

• "Trump did not inherit a shaky economy. Trump inherited the most robust economy in the world ... and one that was getting better with every passing day."

Zoom out: It is true that the biggest-picture indicators at the tail end of the Biden administration look solid — 2.4% GDP growth in Q4, for example, and a 4.1% December unemployment rate.

• Now forecasters are slashing their Q1 GDP estimates — due in part to soft consumer spending in January, just as Trump took office and before his policies had much effect. (Unusually cold January weather was a factor.)
• Inflation came in warm in the first two months of 2025, even before most Trump tariffs had taken effect, a warning that inflation was not fully vanquished. The core Personal Consumption Expenditures Price Index rose at a 4.1% annual rate in January and February, the highest in a year.

Zoom in: There were also warning signs in more detailed data that conditions were not as robust at the end of former President Biden's term as the headline numbers imply.

• Manufacturing was in an ongoing slump, with output contracting on a year-on-year basis every month from July to December. The Institute for Supply Management survey of manufacturers came in at 49.3 in December, just below the level of 50 that is the line between expansion and contraction.
• The job market was stuck in place, with companies not firing many workers but also not doing much hiring. The rate at which employers hired in December was 3.4%; it was higher than that in every single month from March 2014 to February 2020.

• Strong overall job growth in 2024 masked that it was disproportionately coming from sectors less tied to the overall business cycle, particularly state and local government and health care.
• The professional and business services sector experienced year-over-year job losses every month since September 2023, and manufacturing since October 2023.

The bottom line: The economy Biden handed over to Trump was solid by some of the most important measures, but had meaningful pockets of weakness that are becoming more apparent as economic warning signs mount.