Are the Trump and Biden Economies the Same?

Jason Furman is a very good economist, but sometimes he gets some things wrong. His NYT column, saying the Trump and Biden economies are largely the same, is in that category.

Before saying what I think he got wrong, let me mention some very big things he got right. First, people do hugely overrate the impact of a president on the economy. The big things that happen to the economy are usually beyond a president’s control, like Covid or the OPEC price shocks in the 1970s. Nonetheless, the person in the White House tends to get blame or credit.

Second, there is obviously a large element of partisanship in people’s views of the economy. When Democrats see a Democrat in the White House, they tend to say things are good, and bad when there is a Republican. These partisan swings have gotten larger in recent years, and they tend to be bigger for Republicans than Democrats. Jason is on the money there but let me mention a few places where I think he missed the mark.

Harris Did Not Cheerlead the Biden Economy

First, I think he is very unfair in saying that former VP Kamala Harris was running around touting that the U.S. economy was the envy of the world. This claim was in fact true, but that was hardly the main story of her campaign.

Harris went around everywhere saying that she knew people were hurting and outlined proposals, especially on housing, on how she would make things more affordable. We can debate the merits of these proposals, but she was quite explicitly trying to address what she said were major problems in the economy.

I remember this well because I was haranguing people that I knew in the Biden administration that they should be boasting more about their economic achievements. They turned around an economy that was flirting with recession when Biden took office and went on to have the longest stretch of low unemployment in 70 years. Real wage growth for low paid workers was the best in more than half a century. There was an unprecedented boom in factory construction. I said at the time, and would say again, that Trump would have called it “the greatest economy EVER,” if it had happened under his watch.

Anyhow, this is all water under the bridge at this point, but it is simply unfair to say that Harris and the Democrats were blindly touting the great economy prior to the election. There was much more there to tout than they claimed credit for.

Did the Economy Turn for the Worse Under Trump?

Jason shows the data and it is hard to make a case that the economy had a terrible year in 2025, although I think there is a case it had a turn for the worse. I’ll start with a nerdy point that means nothing to most people, but it means a lot to nerds like Jason.

The inflation rate was headed lower and was generally projected to hit the Fed’s 2.0 inflation target in 2025, or be within spitting distance of it. This was a remarkable achievement, since it meant that the inflation rate was brought down from pandemic peaks of more than 8.0 percent with only a very limited rise in unemployment. Few economists thought that was possible.

Most people are not following inflation projections closely, but they do still have a general sense of what a policy of tariffing everyone everywhere means. This is easy to see in the data. Consumer spending on durable goods (items like cars and cameras, much of which is imported) jumped 3.8%, a 25.1% annual rate, in the two months immediately following the election.

This surge in spending on durable goods reversed the trend of declining durable goods prices, which led to the modest increase in the inflation rate in 2025, instead of the decline that had been widely projected under Biden. It is probably also worth mentioning that the last pre-war inflation data suggested a further acceleration, which will be worsened markedly by soaring energy prices.

The unemployment rate has also edged higher. The current rate of 4.4% is not high by historical standards, but it is markedly worse for disadvantaged groups. The unemployment rate for Black workers is 7.7%, up from 6.2% when Biden left office. The unemployment rate for young workers, between the ages of 20-24, rose rapidly in 2025, peaking at 9.2% in September, although it has fallen back down to 7.4% in the most recent data.

The labor market is also weaker by other measures. The quit rate has fallen to 2.0% from a peak of 3.0% in spring of 2022. In fairness, that quit rate was likely unsustainable and the decline took place in 2023 and 2024, but the 2.0% rate is low for an unemployment rate of 4.4%. In the years just before the pandemic, when we had a strong labor market, the quit rate averaged 2.3%. You would have to go back to early 2016, when the unemployment rate was 5.0%, to find a quit rate of 2.0%.

In some respects, quit rates are a better measure of the state of the labor market than the unemployment rate. In a normal month, more than 3.2 million people leave their job, which comes to nearly 40 million on an annual basis. (Some people quit more than once over the course of a year.)

For tens of millions of people, the opportunity to quit means being able to leave a job that was boring, stressful, or offered little opportunity for advancement. For these people, the inability to quit and easily find another job means a bad labor market, even if the unemployment rate is low. In fairness, the drop mostly took place under Biden, but the longer it lasts, the more people feel stuck in a job they don’t like.

It’s also worth noting in this respect that the pace of nominal wage growth has slowed some in the last year and a half. Using the Average Hourly Earnings series, growth slowed from a bit over 4.0% to 3.7% year-over-year in the most recent data. In the Employment Cost Index, it slowed from a bit over 4.0% to 3.5%. These are not sharp slowdowns, but they are consistent with a weakening labor market.

Affordability and That Stuff

I confess to having been a skeptic about all the complaints on “affordability” in the last couple of years. Being a card-carrying economist, I look at real wages and real income, which are both up, and then ask, “what’s the problem?” I also had my skepticism stoked by the parade of people on Twitter who were working two or three jobs but still couldn’t afford to put food on the table. They all disappeared after the election.

But the complaints have persisted, and polls consistently show that people do not feel good about their economic situation. A possible explanation for the gap in real wage and income measures is that our measures of healthcare inflation bear almost no resemblance to the rise in healthcare costs that people actually see.

The measures of inflation look at the change in prices for specific items, like a particular drug or medical procedure. My guess is that most people are concerned about what they pay for healthcare in the form of insurance premiums, co-pays, deductibles, and other out-of-pocket costs. Spending on healthcare has risen more than twice as fast as the Consumer Price Index’s measure of inflation.

How much of this is borne by households depends on the extent to which payments by the government or employers have increased in step with these cost increases. My guess is that they haven’t, which would mean the health care cost increases seen by households would be even more rapid. With healthcare accounting for 8.5% of people’s spending, this would imply a substantial gap between the inflation people experience and the CPI measure of inflation.

This may not be the sole cause of complaints about affordability, but it likely is a big part of the story. Again, this is not something that started when Trump took office, but households are almost certainly paying a larger share of costs under Trump than they were under Biden, especially with the end of the enhanced subsidies for the Obamacare exchanges.

There is one other factor worth mentioning in this comparison. The conditions for repaying student loan debt have worsened markedly under Trump as he has rolled back Biden’s generous income-driven repayment plan. The pandemic moratorium on payments has ended and millions of people are now delinquent or in default on their loan debt. With over 40 million people owing debt on student loans, this is a large group of people who have good cause for thinking the economy is worse under Trump.

The Real Story is the Long-Term

The biggest impact of the difference between Biden and Trump policy is likely to be a long-term story. While Biden had implemented a number of measures to hasten the transition to electric vehicles and clean energy, Trump is doing everything he can to lock us into fossil fuel dependency. As the cost of EVs and clean energy continue to decline rapidly, this decision will be costing us more money through time. It also means the United States will be largely locked out of these important growth sectors. And this is besides from the additional damage we will be doing to the environment.

Trump’s policy on immigration will certainly slow growth. Also, his harassment of universities and researchers will likely lead to many scientists deciding to work elsewhere. The United States will be a much less important source of innovation going forward than it was in prior decades. This is a bad story for the U.S. economy, even if it may not be what people have in mind when telling pollsters the economy is bad.

And the war in Iran is almost certainly to lead to long-term damage. At this point, it’s hard to have much idea of what the endgame looks like, but this attack has done even more than tariffs to leave the United States isolated. That is not a good long-term story.

In short, at least until the war, the effect of Trump’s policies on the economy may have been negative, but they were not disastrous. The longer-term picture is considerably worse.

This first appeared on Dean Baker’s Beat the Press blog.

The post Are the Trump and Biden Economies the Same? appeared first on CounterPunch.org.