The “Great” Economy Trump Left Biden

January 15, 2024

We have been seeing numerous stories in the media about how people support Donald Trump because he did such a great job with the economy. Obviously, people can believe whatever they want about the world, but it is worth reminding people what the world actually looked like when Trump left office (kicking and screaming) and Biden stepped into the White House.

Trump’s Legacy: Mass Unemployment

The economy had largely shut down in the spring of 2020 because of the pandemic. It was still very far from fully reopening at the point of the transition.

In January of 2021, the unemployment rate was 6.4 percent, up from 3.5 percent before the pandemic hit at the start of the year. A more striking figure than the unemployment rate was the employment rate, the percentage of the population that was working. This had fallen from 61.1 percent to 57.4 percent, a level that was lower than the low point of the Great Recession.

The number of people employed in January of 2021 was nearly 8 million people below what it had been before the pandemic. We see the same story if we look at the measure of jobs in the Bureau of Labor Statistics establishment survey. The number of jobs was down by more than 9.4 million from the pre-pandemic level.

We were also not on a clear path toward regaining these jobs rapidly. The economy actually lost 268,000 jobs in December of 2020. The average rate of job creation in the last three months of the Trump administration was just 163,000.

What the World Looked Like When Donald Trump Left Office

In the fourth quarter of 2020 the economy was still being shaped in a very big way by the pandemic. Most of the closures mandated at the start of the pandemic had been lifted, but most people were not conducting their lives as if the pandemic had gone away. We can see this very clearly in the consumption data.

Source: Bureau of Economic Analysis and author’s calculations.

The figure above shows the falloff in consumption between the fourth quarter of 2019 and the fourth quarter of 2020 in some of the areas hardest hit by the pandemic. While overall consumption was down just 0.8 percent, there has been an enormous shift from services to goods.

Inflation-adjusted spending at restaurants was down by 21.5 percent, and much of this spending went for picking up food rather than sit-down meals. Spending at bars was down 47.7 percent. Spending at hotels and motels was down by 43.8 percent as people had hugely cut back travel. Air travel was down 52.4 percent.

Spending on football games, baseball games, and sports events was down by 68.3 percent. Spending on live concerts and other entertainment was down a bit less, at 67.4 percent. And movie going was down 92.7 percent.


The Story of Cheap Gas

Donald Trump and his supporters have often boasted about the cheap gas we had when he was in office. This is true. Gas prices did fall below $2.00 a gallon in the spring of 2020 when the economy was largely shut down, although they had risen above $2.30 a gallon by the time Trump left office. The cause of low prices was hardly a secret, demand in the U.S. and around the world had collapsed. In the fourth quarter of 2020 gas consumption was still 12.5 percent below where it had been before the pandemic.

In fact, gas prices likely would have been even lower in this period if not for Trump’s actions, which he boasted about at the time. Trump claimed to have worked a deal with Russia and OPEC to slash production and keep gas prices from falling further. The sharp cutbacks in production were a major factor in the high prices when the economy began to normalize after President Biden came into office since oil production cannot be instantly restarted.


The End of the Trump Economy Was a Sad Story

Donald Trump handed President Biden an incredibly damaged economy at the start of 2021. People can rightfully say that the problems were due to the pandemic, not Trump’s mismanagement, but the impact of the pandemic did not end on January 21. The problems associated with the pandemic were the main reason the United States, like every other wealthy country, suffered a major bout of inflation in 2021 and 2022.

It is often said that people don’t care about causes, they just care about results. This is entirely plausible, but the results in the last year of the Trump administration were truly horrible by almost any measure.

It may be the case that people are more willing to forgive Trump for the damage the pandemic did to the economy than Biden, but that is not an explanation based on the reality in people’s lives, or “lived experience” to use the fashionable term.

That would mean that for some reason people recognize and forgive Trump for the difficult circumstances he faced as a result of the pandemic, but they don’t with Biden. It would be worth asking why that could be the case.    


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