WASHINGTON (AP) — Four years ago was a time of fear and chaos.
As COVID-19 spread, the death toll rose. The financial markets panicked. Oil prices briefly fell into the red. The Federal Reserve cut its interest rates to counter the sudden recession. And the U.S. government launched historic borrowing — adding trillions to the national debt — to keep families and businesses afloat.
But as Donald Trump recalled the moment at a recent rally, the former president exuded pride.
“We had the greatest economy in history,” the Republican told his audience in Wisconsin. “The 30-year mortgage rate was at a record low, the lowest ever recorded… 2.65%, that’s how high your mortgage rates were.”
The question of who can best control the U.S. economy could be a deciding factor in winning the presidential election in November. According to an April Gallup poll, Americans were most likely to cite immigration as the country’s biggest problem. But the economy in general and inflation were also high on the list.
Trump may have an advantage over President Joe Biden on key economic issues, according to an April poll by the Associated Press-NORC Center for Public Affairs. The poll found that Americans were more likely to say that Trump as president helped the country with job creation and the cost of living. Nearly six in 10 Americans said Biden’s presidency has hurt the country in terms of cost of living.
But the economic numbers reveal a far more complicated reality during Trump’s time in the White House. His tax cuts never delivered the growth he promised. Its budget deficits skyrocketed and then remained relatively high under Biden. His tariffs and trade deals never brought back all the factory jobs he lost.
And there was the pandemic, an event that led to historic job losses for which Trump takes no responsibility, as well as low inflation – for which Trump is fully responsible.
If anything, the economy during Trump’s presidency never lived up to his own hype.
ADEQUATE (NOT EXCEPTIONAL) GROWTH
Trump assured the public in 2017 that the U.S. economy would grow by “3%” with his tax cuts, but added, “I think it could ultimately go up to 4, 5 and maybe even 6%.”
Excluding the 2020 pandemic, growth after inflation averaged 2.67% under Trump, according to the Bureau of Economic Analysis. When the pandemic-related recession is taken into account, this average drops to a paltry 1.45%.
In contrast, growth during then-President Barack Obama’s second term averaged 2.33%. So far, annual growth under Biden has averaged 3.4%.
MORE national debt
Trump also assured the public that his tax cuts would pay for themselves due to stronger growth. The cuts were far-reaching, but disproportionately favored corporations and ultra-high-net-worth companies.
The tax cuts enacted in 2017 never fulfilled Trump’s deficit reduction promises.
According to the Office of Management and Budget, the deficit worsened to $779 billion in 2018. The Congressional Budget Office had forecast a deficit of $563 billion before the tax cuts, meaning the tax cuts increased borrowing by $216 billion in the first year. In 2019, the deficit rose to $984 billion, nearly $300 billion more than the CBO forecast.
Then the pandemic hit, and with a flood of federal aid, the resulting deficit topped $3.1 trillion. This borrowing allowed the government to make direct payments to individuals and diminutive businesses while the economy was shut down, often increasing bank accounts and making many feel better even though the economy was in recession.
Deficits were also high under Biden, as he signed a third round of pandemic aid and other initiatives to combat climate change, build infrastructure and invest in U.S. manufacturing. Its budget deficits: $2.8 trillion (2021), $1.38 trillion (2022) and $1.7 trillion (2023).
The CBO estimated in a report released Wednesday that extending parts of Trump’s tax cuts set to expire after 2025 would add another $4.6 trillion to the national debt by 2034.
LOW INFLATION (BUT NOT ALWAYS FOR GOOD REASONS)
According to the Bureau of Labor Statistics, inflation was much lower under Trump, never exceeding the annual rate of 2.4%. Under Biden, the annual rate even reached 8% in 2022 and is currently 3.4%.
There were three main reasons inflation was low during Trump’s presidency: the legacy of the 2008 financial crisis, the Federal Reserve’s actions and the coronavirus pandemic.
Trump entered the White House with inflation already low, largely due to the ponderous recovery from the Great Recession, when financial markets collapsed and millions of people lost their homes to foreclosure.
During Obama’s second term, inflation barely averaged above 1% as the Fed struggled to stimulate growth. Nevertheless, the economy grew without overheating.
But in the first three years of Trump’s presidency, inflation averaged 2.1%, roughly in line with the Fed’s target. Nevertheless, the Fed began raising its own interest rate to keep inflation low at the central bank’s own target of 2%. Trump repeatedly criticized the Fed for wanting to boost growth despite the risks of higher prices.
Then the pandemic came.
Inflation fell and the Fed cut interest rates to maintain the economy during the lockdowns.
When Trump celebrates historically low mortgage rates, he does so because the economy has been weakened by the pandemic. Likewise, gas prices fell below an average of $2 per gallon because no one was driving in April 2020 as the pandemic spread.
FEWER JOBS
According to the Bureau of Labor Statistics, the United States lost 2.7 million jobs during Trump’s presidency. Excluding the pandemic months, it created 6.7 million jobs.
In contrast, 15.4 million jobs were created during Biden’s presidency. That’s 5.1 million more jobs than the CBO predicted would be created before its coronavirus relief and other measures took effect – a sign of how much it has boosted the job market.
Both candidates have repeatedly promised to restore factory jobs. Between 2017 and mid-2019, Trump created 461,000 manufacturing jobs. But the gains stalled and then led to layoffs during the pandemic, with the Republican posting a loss of 178,000 jobs.
So far, the U.S. economy has added 773,000 manufacturing jobs during Biden’s presidency.
