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Data shows why voters prefer Trump on economy: Inflation

Despite strong current numbers, steep price increases of past few years have hurt Biden

By Mark Niquette, Phil Kuntz and Stuart Paul, Bloomberg News
Published: May 17, 2024, 5:08pm

Americans give Donald Trump the edge over Joe Biden on the economy in poll after poll.

That’s even as the Biden years have been the best time to find work since the 1960s, and the U.S. has bounced back from the pandemic with stronger growth than international peers such as the European Union, United Kingdom and Japan and stronger growth overall than under then-President Trump.

Instead, voters this year are focused on the steep jump in prices from the post-pandemic surge in inflation.

In the April Bloomberg/Morning Consult swing-state poll, respondents said by 51 percent to 32 percent that they were doing better financially under Trump than Biden. Out of 15 economic issues, the cost of everyday goods was far and away the top concern of registered voters in the poll.

Real disposable personal income per capita — money available to spend after taxes and adjusted for inflation — is a clear measure of standard of living. Under Biden, it’s improved, but on average only at about a quarter the pace set during the Trump years.

Trump fueled the economy with much more deficit-financed stimulus than Biden, enacting a $1.9 trillion, 10-year tax cut skewed toward wealthier households even before the pandemic economic crisis.

The former president pumped in another $3.5 trillion for stimulus checks and other pandemic relief, the nonpartisan Committee for a Responsible Federal Budget estimates. That pushed up Americans’ incomes even though pandemic lockdowns crashed the economy and drove up unemployment. Trump’s tax cuts and pandemic relief compare to $2.2 trillion of net relief under Biden, according to the committee’s estimates. The two presidents’ successive rounds of stimulus sent federal debt soaring.

Still, Biden-era inflation resulted in disposable income growth that’s on track to be one of the worst of any post-World War II presidency.

The cumulative increase in consumer prices during Biden’s term likely will end up being higher than any other president in the past 40 years. By comparison, inflation under Trump generally ran around the Federal Reserve’s 2 percent target and ended his term even lower.

Trump came into office with inflation at 2.5 percent in 2017, and the pandemic economic crash brought the rate down to almost zero. Annual inflation hit a 40-year high of 9.1 percent in June 2022 as the economy reopened. The rate has since fallen but was still a stubbornly high 3.4 percent in April.

Republicans blame the pandemic-relief bill Biden signed in March 2021 and other federal spending. But stimulus checks were also distributed during Trump’s presidency, and tax cuts were enacted. The joint effect of pandemic-era relief programs under both presidents likely played a role in generating inflation when the economy reopened. Supply-chain constraints when the country roared back to life were an additional — and significant — catalyst.

Biden’s projected average 4.1 percent unemployment rate would be the lowest for any modern president except for Lyndon Johnson’s 1965-1969 term.

The jobless rate soared from 3.6 percent at the end of 2019 to 14.8 percent in April 2020 as the pandemic raged before falling to 6.4 percent in the month Trump left office. It continued falling under Biden as the economy recovered.

The Democratic president can boast of a jobless rate below 4 percent for more than two years, the longest stretch of such low unemployment in more than half a century.

The sustained period of strong employment opportunities has especially benefitted groups that historically had a hard time getting work, such as racial and ethnic minorities and the disabled. African American unemployment rates hit the lowest level on record under Biden, though they also dropped to a decades-long low under Trump shortly before the pandemic. More mothers who have children under 18 at home now have jobs than ever recorded in data going back to 2009, likely helped by the strong labor market and employers’ post-pandemic acceptance of remote and hybrid work arrangements.

Stocks have surged under both presidents. As of Wednesday’s market close, the cumulative increase in the benchmark S&P 500 stock index under Biden is slightly ahead of gains at the same point in Trump’s presidency.

Stocks finished strong under Trump, with the S&P gaining a cumulative 68 percent while he was in the White House. That included a roller-coaster pandemic crash followed by a breathtaking rally fueled by government stimulus and Federal Reserve interest-rate cuts.

Trump’s tax cuts slashed the federal corporate income tax rate from 35 percent to 21 percent, pumping up company profits and consequently their stock prices. Interest rates were also low and inflation remained under 3 percent during Trump’s presidency, helping buoy equities.

Under Biden, stocks have been on a tear recently despite higher interest rates. Strong overall economic growth has boosted corporate profits while artificial intelligence advances fed excitement about improving productivity. The market also has benefited from outsized growth of the “Magnificent Seven” U.S. technology companies.

It’s gotten much harder to afford a new home under Biden, largely because the Fed’s campaign of interest-rate increases to fight inflation has driven up mortgage rates.

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Even so, average mortgage rates under Biden are lower than for any modern president before Barack Obama.

But the very low mortgage rates during the pandemic have perversely made it harder to buy a new home now. Homeowners who refinanced with cheap mortgages are reluctant to sell, reducing the supply of homes on the market and keeping prices high.

Overall economic growth has been stronger under Biden than Trump, powered by savings consumers had left over from hunkering down during the pandemic along with stimulus from Biden’s pandemic relief package.

The U.S. economy has outpaced global peers under Biden as it recovered from COVID, which produced wild swings in GDP in the final year of Trump’s presidency.