Get ready: In the 2024 presidential campaign, candidates will talk about the economy. A lot.
We know because it's already happening.
Incumbent President Joe Biden has touted rapid job growth under his watch. His predecessor and leading candidate for the Republican nomination, Donald Trump, has focused on the highest inflation in four decades, which peaked in the summer of 2022.
Biden argues that the economy has turned the corner because of inflation. Trump, who confidently leads former South Carolina Gov. Nikki Haley, counters that residual inflation continues to cause economic problems.
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Voters are listening.
When the Quinnipiac University poll asked respondents in February what they considered the country's most pressing issue, 20% said it was the economy – with preserving democracy a close second at 21%. Among Republicans, 24% chose the economy (second only to immigration at 35%), while 24% of Independents chose the economy, making it their top issue.
With the Super Tuesday primaries approaching this week, PolitiFact decided to look at some common economic talking points in the presidential campaign. We compared the country's economic performance not only under Biden and Trump, but also under their three predecessors: Barack Obama, George W. Bush and Bill Clinton.
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No president is all-powerful in economic matters. The severe but relatively short interruption caused by the corona pandemic also makes comparisons difficult. And beyond the numbers, there are intangibles like leadership skills.
There is no easy answer as to who was the better economic manager. In terms of numbers, Biden has some advantages over Trump and vice versa. Other economic statistics show that both presidents posted impressive numbers in their first three years in office. (Looking at the first three years in office was the fairest comparison, since Trump's fourth year was hit by the coronavirus pandemic and Biden's fourth year is only two months old.)
Biden's best argument: a rapid increase in jobs and manufacturing growth
In January, Biden emphasized that Trump was the first president to experience a net job loss since Herbert Hoover, who was in office at the time of the Great Depression – but did not mention that the pandemic had caused the 2020 crash.
Excluding the pandemic year of 2020, we found that the economy added jobs faster under Biden than under Trump—and faster than under any of Biden's recent predecessors.
Under Biden, U.S. employment is now 10% above where it was when he was sworn in. In second place after three years is Clinton with almost 8%, followed by Trump with 4.4%. Both Obama and Bush had fewer vacancies after three years than on the first day of their terms.
Biden benefited from an opportune moment. It was inaugurated in January 2021 as the pandemic subsided. Although the jobs recovery began under Trump, Biden has been blessed with a steady flow of Americans returning to jobs that were hampered during the pandemic.
Still, the simple return of workers distracted by the pandemic doesn't explain all of the job gains Biden has in mind, even though Trump has tried to make the case. Employment data over Biden's first three years in office is well above pre-pandemic workforce levels.
Given that job creation slowed during Trump's final months in office, “it wasn't inevitable that we would see the huge rebound that we did under Biden,” said Dean Baker, co-founder of the liberal Center for Economic and Policy Research . Biden's American Rescue Plan, a pandemic recovery bill passed weeks after Biden took office, “was a big deal here.”
Another factor in the expanding job market – but one that has become a political double-edged sword – has been higher immigration rates under Biden. That has helped boost the economy, according to analyzes by the nonpartisan Congressional Budget Office and others, even as it allows critics to debate the chaos at the border.
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Biden highlighted manufacturing job growth as he touted the bills he signed, including the bipartisan infrastructure bill, the CHIPS and Science Act and the Inflation Reduction Act.
The data shows that manufacturing jobs have increased by about 6.5% since Biden took office. Trump is in second place with 3.4%, followed by Clinton with 2.5%. Three years into their terms, both Obama and Bush experienced a loss of manufacturing jobs.
Trump's best case: inflation, wage growth, gasoline prices
Biden and Trump have dueling messages on inflation, which peaked at over 9% in the summer of 2022. Economists generally blame pandemic-era supply chain problems, with Biden's relief package exacerbating price increases.
Biden has emphasized how much inflation has fallen.
“Wages are rising. Inflation is down,” Biden said in a Feb. 12 speech in Washington, D.C. to the National Association of Counties. The following day, Biden welcomed the release of new inflation statistics showing that prices rose 3.1% in the year to January 2024, about a third of the 2022 peak. It remains slightly above the 2% the Federal Reserve would like to see before cutting rates.
According to economists, the main reasons for the decline in inflation are factors that the government does not control: interest rate hikes by the Federal Reserve, a drop in oil prices and a slowdown in the Chinese economy.
Inflation hasn't hindered Trump. During his first three years in office, Trump saw wages exceed inflation – the opposite of Biden.
The data is improving for Biden, but this picture depends heavily on the time frame used.
Starting with Biden's first day in office, prices have risen faster than wages – never a good sign for a president seeking re-election.
“In 2021 and 2022, people went to work and fell even further behind,” said Douglas Holtz-Eakin, president of the center-right American Action Forum. “They haven’t done it yet despite the increases in 2023.”
However, under Biden's watch, wage growth is on track to outpace price growth within a few months. Additionally, wages have exceeded the inflation rate for more than a year, and wages have also exceeded the inflation rate since January 2020, the last month before the pandemic.
One difference between the Biden and Trump economies is data showing that wage increases under Biden were particularly strong for poorer people.
Trump could make many valid claims about the pain of inflation. However, he exaggerated how much the prices of bacon, overall groceries and gasoline have risen.
In December, Trump said that gas prices “are now $5, $6, $7 and even $8 a gallon.” We rated this claim as mostly false because few gas stations nationwide had prices that high. The national average price per gallon at the time was $3.14.
Under Biden, gasoline prices have been unusually high, although they have fallen from their peak of $5 a gallon. This decline is due to increased production, including in the United States, and the realignment of the oil market following Russia's invasion of Ukraine in 2022, which led Western nations to limit purchases of Russian oil.
Today, gas prices are still about a third higher than they were when Biden took office. After three years, that is a larger percentage increase than under Clinton, Bush or Trump. Obama fared worse; Gasoline prices were 89% higher after three years.
Where Biden and Trump have similar success stories: unemployment rates, GDP, stock market
Both Biden and Trump have records in several key metrics.
In June 2023, Biden noted the low unemployment rate that existed under his watch, saying it had been below 4% for “the longest period in 50 years in American history.” We rated this Mostly True. Unemployment has remained low, among other things, because companies have more positions to fill than there are applicants available. That has pushed some Americans back to work.
However, Trump also ensured low unemployment rates. During Trump's first three years in office, the unemployment rate averaged 4%; In Biden's first three years, which included a few months when unemployment was still calming after job losses caused by the pandemic, the average was 4.2%.
Meanwhile, a measure called the “misery index” adds the unemployment rate and the inflation rate.
After rising when inflation was at its highest in the summer of 2022, the measure has fallen to levels lower than under Clinton, Bush and Obama at the end of the third year. Trump's misery index was lower at this point in his presidency, but Biden's current level is lower than when Trump left office.
Biden also highlighted growth in the most basic measure of economic output: gross domestic product, or the total value of all goods and services produced in the United States. In January, he called economic growth of 3.1% in the fourth quarter of 2023 “good news for American families and American workers.” That’s three years in a row of growing the economy from the center out and from the bottom up.”
Excluding the pandemic years of 2020 and 2021, annual GDP growth rates under the two most recent presidents have been similar, ranging from about 2% to 3%. This range was also typical of Obama's presidency and much of Bush's presidency, with the exception of the two harshest years of the Great Recession, 2008 and 2009.
Meanwhile, Biden recently praised the health of the stock market, saying on X: “The strong stock market is a sign of confidence in the American economy.”
As president, Trump often touted the gains in the stock market, although he dismissed the gains under Biden as something that only benefited the rich (incorrectly – more than half the population owns stocks).
Either way, both presidents caused stock prices to rise. During Trump's first three years, the S&P 500, a general stock market indicator, rose 1,050 points. In Biden's first three years, it rose 988 points. (Since January 20, 2024, the S&P is up another 287 points.)
By Louis Jacobson, PolitiFact Staff Writer
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