Yahoo Finance That time the Trump economy tanked
In a 1980 debate with President Jimmy Carter, Ronald Reagan memorialized the question, “Are you better off than you were four years ago?” It helped Reagan beat the incumbent in that year's presidential election.
You are not likely to hear Donald Trump asking the same question about Joe Biden’s presidency. Trump can certainly ding Biden for the inflation that revved up in 2022 and 2023, but he would also prefer that voters forget how the economy was doing in 2020 during Trump’s last year as president.
Four years ago, of course, the COVID pandemic was causing a brief but traumatic recession that the US economy wouldn’t recover from until Biden’s second or third year in office. We know now that $6 trillion in fiscal stimulus and a comparable degree of monetary magic by the Federal Reserve bounced the nation out of recession in record time. But 2020 was a bad year economically, and in some ways it set the stage for the inflation that has become one of Biden’s biggest electoral liabilities.
As COVID lockdowns began early in 2020, a recession began in February and technically ended in April — the shortest recession in records going back to the 1850s. But the end of the recession only meant that the economy stopped shrinking. Economic output didn’t return to pre-COVID levels until early 2021 and employment didn’t recover until the middle of 2022.
As part of the Bidenomics Report Card, Yahoo Finance compares the performance of the Biden economy with the Trump economy at the same point in their presidencies. Through the first three years, there wasn’t all that much difference. Job and GDP growth were stronger under Biden. But inflation was higher too. The stock market did well under each.
But entering the fourth year of Biden’s presidency, the economics of the two administrations diverge quite a lot, as the following charts show.
GDP growth has slowed under Biden, but at the same point in Trump’s presidency, it collapsed.
Same with employment during Trump's fourth year in office. The economy lost 22 million jobs in just two months, from February to April of 2020.
One peculiarity of the COVID recession was a surge in reported income. That happened because companies tended to lay off lower-paid workers first, which meant that those who continued to work suddenly had higher average incomes.
The stock market also tanked during the COVID outbreak. But it recovered pretty quickly, in large part because the government came to the rescue of corporate profits.
Hardly anybody foresaw it at the time, but the massive shift in spending toward goods and away from services turned out to be a big cause of the inflation that roared in 2022. Also contributing: stimulus payments and other bailout programs that put spending money in people’s pockets and COVID-related supply chain snafus that persisted for several years.
The COVID recession wasn’t Trump’s fault. His handling of the pandemic was chaotic and at times absurd, with Trump trying to pretend it was no big deal that thousands of Americans were dying from the virus every day. But the pandemic threw the whole world into a recession, and the United States emerged better than just about anybody.
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By the same token, inflation wasn’t really Biden’s fault. He did sign one of the four major COVID stimulus bills that pumped a lot of excess money into the US economy, but Trump signed the other three. Biden had no control over most of the factors causing inflation, including Russia’s 2022 invasion of Ukraine, which temporarily sent energy prices soaring.
Yet the COVID recession and “Bidenflation,” as Republicans call it, remain key issues for voters in this year’s presidential election. Polls show that voters trust Trump more on the economy, suggesting that many Americans associate Trump more with the relatively steady pre-COVID economy than with the COVID recession. Biden is trying to flip that by linking Trump with COVID and even asking, "Were you better off four years ago?"
In the fall of 2020, when the last undecided voters were choosing between Biden and Trump, the economy had started to recover but was still badly damaged. On the Yahoo Finance Trumponomics Report Card, the Trump economy had fallen from a B+ grade before COVID to a C on the eve of the election. Growth and employment were still severely depressed, contributing to Trump’s loss.
Biden will enjoy a much better economy this fall, with inflation, not growth or jobs, being the main voter concern. Inflation has already fallen from a peak of 9% in 2022 to 3.4%, and could be a bit lower still by Election Day. But Biden still has a lot of skeptical voters to convince. Get ready to hear a lot more from the Biden campaign about the 2020 economy.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman.
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