Forty-eight months and 21%. As President Joe Biden hands off stewardship of the U.S. economy to Donald Trump, those two numbers describe how Biden’s economic legacy is viewed.
Forty-eight is the number of consecutive months American jobs grew under Biden, the entirety of his tenure, from January 2021 through December 2024. The feat is extraordinary, making Biden the only president going back to at least 1939 to do this. (There were two other presidential terms where this happened, Barack Obama’s and Ronald Reagan’s, but they followed first terms that saw recessions with monthly job losses.)
The 21% is how much the Consumer Price Index rose during Biden’s term, almost triple the pace of Trump’s first term and peaking with an annual inflation rate of more than 9% in mid-2022. That peak gave Biden the dubious distinction of seeing the fastest rate of rising prices since Reagan, a major factor in Trump’s victory in November.
“Broadly speaking, the economy is in a pretty good place,” said Mark Zandi, chief economist with Moody’s Analytics. “If nothing messes it up, there’s no shocks, there’s no policy mistakes, it should be fine for the foreseeable future.”
The temptation to mess it up may be too strong to resist for Trump, who takes office on Monday and could start implementing his tariff agenda almost immediately. Trump successfully ran on the idea that the economy under Biden was uniquely terrible, and the public agreed: 68% of voters said the economy was either “not so good” or “poor.”
Treasury Secretary Janet Yellen, in a prepared speech Wednesday in New York City, said the economy had performed “remarkably well” in the wake of the onset of the COVID-19 pandemic and challenged those who questioned the choices the Biden administration made.
“All policy choices entail trade-offs, but the Biden administration made sound decisions that set the economy on a strong course,” she said.
On paper, there is a lot for the Biden administration to crow about:
Even a Biden critic, Veronique de Rugy, senior research fellow with the libertarian Mercatus Center, had some compliments for his economic record.
“In my opinion, the economy under Biden was good. It’s not as if unemployment was high,” she said.
But that record has to be looked at in the context of other things, she said.
“Red tape, debt and inflation,” de Rugy said. “The economy was really strong because it was fueled by, I mean, an insane amount of money. But it was also suffering from inflation, and that is not good for people.”
Yellen in her speech defended the choice to act aggressively through spending to revive the economy, pointing out how much faster and stronger the U.S. economy recovered from the pandemic shock than its international rivals, noting the economy grew by 11.5% in the U.S., better than any other member of the Group of Seven, the world’s largest developed economies.
Yellen’s defense also centered on another question: What if the administration had taken a more cautious but less expensive approach in order to keep inflation low? She said the costs would have been tremendous.
Keeping inflation to the Federal Reserve’s 2% target would have meant letting joblessness rise as high as 10% to 14% in 2021 and 2022, the first two years Biden was in office.
“That would have meant an additional 9 to 15 million people out of work,” she said.
The incoming Trump administration has already signaled it intends to take a different course. But it’s unclear whether those plans will further slow inflation or inflame it.
Scott Bessent, Trump’s pick to be Yellen’s successor, in his testimony Thursday before the Senate Finance Committee, again touted his “3-3-3” plan. It calls for 3% annual economic growth, cutting annual budget deficits in half to 3% of the size of the overall economy and producing 3 million more barrels of oil a year to bring energy prices down.
Trump has touted increased energy production as a way to bring down prices, though that would only be true to the extent the price of a good or service was energy-dependent and the seller was willing to pass those savings on to the consumer.
The 3% economic growth target may not be a problem. The economy grew at 3.0% and 3.1% in the second and third quarters of this year, and the Atlanta Federal Reserve Bank’s gross domestic product-tracking GDPNow projection pegged the fourth quarter at 3% as well on Friday.
But trimming the deficit in half will be difficult. The nonpartisan Congressional Budget Office said Friday it expects the deficit for 2025 to be close to 2024’s, at $1.865 trillion. Cutting that in half would require spending cuts, tax hikes or a combination of both totaling at least $900 billion, a tough sell without cutting politically popular programs or enacting unpopular tax increases.
But Zandi was most skeptical of the increased oil production target in the 3-3-3 plan.
“I don’t understand the strategy at all because what matters in terms of more exploration, development and investment in the fossil fuel industry is higher prices. They’re not going to invest otherwise,” he said.
“For them, it’s the price of oil. And if you tell them, ‘Pump more so we get oil prices down,’ that doesn’t compute.”
There may be signs that oil companies are content with current record production levels. On Jan. 8, the Department of the Interior said there were no bidders for an oil and gas lease sale in Alaska’s Arctic Refuge. A previous sale yielded only $14.4 million in bids. Together the two sales, required by the 2017 tax cut bill, were supposed to generate $2 billion over 10 years, the Interior Department said.
Mercatus’ de Rugy said there was plenty of room for Trump to change course without endangering the economy, with one condition.
“Actually, I think there’s a lot to do. There’s a lot of rocking the boat to do, but it has to be things that lower prices,” she said.
Though de Rugy said she didn’t fear broad tariffs would result in higher inflation, many economists disagree, and Trump’s plans for tightening immigration and preserving and broadening tax cuts run that risk as well.
Zandi said the incoming economic policymakers should be cautious about making big changes unless they are very sure they won’t harm the economy and will result in more jobs and income. But he expected changes anyway.
“I’m skeptical and I doubt it,” he said of whether many of Trump’s touted plans would meet that bar, “but it looks like we’re going to go down the path anyway.”
