How the Trump financial system compares to economies beneath different presidents
President Donald Trump inherited a strong economy that continued to grow at a healthy rate during his first three years in office. Then the Covid-19 pandemic changed everything.
At the start of Donald Trump’s presidency in January 2017, the economy was healthy.
Employers had continuously created new jobs for 76 months – the longest recruitment streak recorded at the time – and unemployment was just 4.7%, a 10-year low. Corporate earnings were near all-time highs, as were stocks. Overall, gross domestic product grew by around 2.5% annually – a modest rate for the world’s largest economy. Not everything was rosy: The federal debt was at its highest level since the 1950s. But by most standards it was hard to deny: the economy was on solid foundations. And luckily for Trump, growth continued from there.
Below we’ve listed 10 indicators to show how the economy has done under each president from Ronald Reagan to Trump. Remember that each presidency began in different circumstances. George W. Bush’s first year in office was plagued by the dot-com bust and the 9/11 attacks. Barack Obama started the great recession after a devastating real estate crash and global financial crisis. Despite these crises, the recent presidents chaired a growing economy during their tenure. The Trump presidency will be shaped by the country’s response to the Covid-19 pandemic, which is still having an impact as both a health crisis and an economic crisis.
Hover over the charts to see how the Trump economy has fared compared to his predecessors.
President Trump’s first term in office was solid employment growth through 2020, but then the pandemic wiped out about 15% of American jobs in just two months. The economy has only recovered about half of those jobs since May, and Trump faces the worst election job losses ever under a president.
In contrast, the labor market was up 0.4% at this point in Obama’s presidency. He took office at a time when employers were shedding hundreds of thousands of jobs every month. The attitude shifted into higher gear later in his presidency.
When Trump took office, Obama inherited one of the strongest labor markets in American history. But Covid-19 quickly put an end to that. The unemployment rate rose to 14.7%, up 10 percentage points from when Trump took office. Although it has improved slightly since then, unemployment remained high in September. No other president has seen such a sudden surge in unemployment.
Trump loves to talk about how middle class incomes have grown during his presidency – and that was the case for his first three years. In September, the Census Bureau released data showing the average American household earned $ 68,703 in 2019 – an increase of $ 5,800, or 9%, from 2016 when adjusted for inflation. A strong labor market contributed to increased income as more people worked full-time throughout the year. And more than 20 states have also raised their minimum wages, increasing the incomes of low-income workers.
We don’t have any data for 2020 yet, but the pandemic is sure to have a huge impact on those numbers. For some families, $ 1,200 stimulus checks and a temporary $ 600 increase in weekly unemployment benefits actually increased income during the pandemic. But many others, especially those who have lost businesses or are struggling with long-term unemployment, are struggling to make ends meet.
The longest bull market in history began shortly after Obama took office and continued well into Trump’s presidency. Investors welcomed Trump’s corporate tax cuts in 2017, and although the trade war with China put them at risk, stocks saw a record run through 2020. At the start of the pandemic in 2020, the S&P 500 fell 34%. in about a month before recovering later in the summer. By October 27, the index rose a total of 49% during Trump’s presidency. While this quick rebound is a ray of hope for him, it is also in contrast to 76% equity gains under Obama and 64% gains under Clinton at the same point in time in their presidencies.
The real estate market is one of the few parts of the economy that did not decline dramatically during the pandemic. This is partly because record-low interest rates and the work-from-home trend have pushed city dwellers to buy houses in suburban and rural areas, driving house prices soaring in many regions. This is also because extensive measures, including a moratorium on evictions and mortgage leniency programs, have helped families weather the crisis so far. These unpaid bills could eventually catch up with millions of families and put the housing market in distress. So far, house prices have risen 21% since Trump’s inauguration.
Food pricesSmall increases
If it looks like your grocery bill has been higher lately, it’s because food prices suddenly rose during the pandemic. However, in the long run they were relatively stable. By then, food prices were already rising 9% or more in the Reagan, George HW Bush, Clinton, and George W. Bush presidencies. They only increased 6.1% under Trump and 5.9% under Obama, due to an era of low inflation.
Consumer spendingUp, but below average
American consumers are the backbone of the US economy and are not easily impressed. Despite slashing their spending at the start of the pandemic, consumers quickly reopened their wallets in May and June as soon as economic reviews and unemployment benefits came to the rescue. Retail spending on goods, particularly through online retailers, recovered rapidly. (Meanwhile, restaurant spending on services like haircuts, travel, and dining remains well below pre-Covid-19 norms.) Despite a rapid recovery, consumer spending rose less under Trump than under the previous five presidents.
Jobs in productionBarely changed
American manufacturing jobs peaked in 1979, and no president other than Clinton has since spearheaded the rise in factory jobs. When Trump promised to bring back factory jobs, it was a big deal. Manufacturing created some jobs in Trump’s first three years, but in 2020 the pandemic ruined the little progress made by these workers. In September, the sector fell 164,000 jobs, 1.3% from when Trump took office. However, the layoffs in factories under Presidents Reagan, Obama, and the Bushes were even steeper as globalization and technological advancement reduced American manufacturing workers.
The federal government’s debt burden hasn’t been as high in proportion to the size of the economy as it has been since World War II, but it didn’t arrive during Trump’s presidency alone. Debt grew under Reagan, who launched massive tax cuts, and under Obama, who deployed government stimulus funds to support the economy during the Great Recession.
At the time Trump took office, the debt was around 76% of GDP. By mid-2020 it was 105% – an increase of 29 percentage points during his presidency. Economists often argue in favor of paying off debt when the economy is strong and spending more when the economy is weak. But despite his promise to “get rid of” the debt, Trump has built it up in both good times and bad. While much of that surge came from coronavirus bailouts, previous measures like corporate tax cuts and a surge in defense spending also contributed to the surge.
gross domestic productA deep recession
The broadest measure of economic activity – gross domestic product – measures the value of goods and services produced in the country. It usually grows between 2% and 3% per year, adjusted for inflation. Trump’s first three years were all in this range, but 2020 saw a deep decline. We don’t have a full year of data yet, but the second quarter was the worst since 1947. Data for the third quarter will be released on Thursday and is expected to show some improvement – but not a full recovery.
Many economists predict that companies and workers will not fully recover from this severe economic downturn for years.
Additional development by Byron Manley
The gross domestic product lines are calculated as the percentage change from the fourth quarter prior to the inauguration of each president. This is the most recent data prior to taking office. The median income lines are calculated as the percentage change from the last calendar year prior to the inauguration of each president. The lines showing unemployment and federal debt are calculated as a percentage change since these two measures started out as measures. All other rows are calculated as a percentage change from January when each president was inaugurated. President Reagan is not included in the housing price data because the data is only available through 1987 and does not include his entire presidency.