Author: Davit Shatakishvili, Contributing Analyst, American University, Washington D.C.


On November 5, 2024, the leading global economic superpower will conduct its presidential elections, potentially featuring a rematch between Republican Donald Trump and Democrat Joseph Biden. The upcoming elections will significantly impact both the domestic and foreign policies of the United States, as well as shape the strategies and global standing of the European Union and other leading nations. In addition to political issues, the results of the elections will affect such key areas as: The economy, the country’s immigration policy, international conflict management, and national security. In this regard, the global interest in the U.S. presidential election is understandable. While the President of the United States is elected by the American people, reflecting their personal sentiments and expectations shaped by domestic affairs, the outcome holds significant implications for the international community.


Socio-economic issues appear to be a pivotal factor influencing the average American voter’s decision-making process, as evidenced by multiple authoritative surveys. For example, in a long-term survey carried out by the American multinational analytical company Gallup, voters consider inflation and jobs to be the biggest challenges in the post-pandemic period. This was also confirmed by the joint study by Morning Consult and Bloomberg. In swing states, where voter support is closely divided between Democratic and Republican candidates, without a clear majority for either, economic issues are considered the top priority by the electorate. These concerns may ultimately sway the outcome of the 2024 presidential election. As such, it is important to analyze and compare the economic achievements of presidents Trump and Biden, along with current expectations, as these factors are expected to significantly influence the American electorate’s choices.



Economic Growth


During the tenures of President Trump and President Biden, the U.S. economy has generally exprienced growth, with the exception of the downturn triggered by the Covid-19 pandemic. Following a decline of 2.8% in the gross domestic product (GDP) in 2020, the economy swiftly resumed its upward trend in 2021 under President Biden’s leadership, achieving a significant growth rate of 5.9% by year-end. As for 2022-2023, the U.S. economy grew by 1.9% in 2022, and by 2.5% last year. Under the administration of President Trump, the economic growth rate fluctuated in the range of 2.3-2.9%. Chart 1 shows U.S. economic growth in 2017-2023. President Biden took office on January 20, 2021.



Chart 1.


Source: The Bureau of Economic Analysis, U.S. Department of Commerce





One of the biggest achievements of the President Biden administration is a fairly robust labor market, which faced difficult challenges during the pandemic. That is why most economists did not predict job growth at all. Importantly, despite the tightening monetary policy by the Federal Reserve, the labor market has managed not only to remain stable but also to experience growth. In the first three years since the Biden administration took office, employers have added more than 14 million jobs, which is about 400,000 new jobs per month. However, this trend moderated at the end of 2023, when the number of new jobs fell to 216,000 in December. In contrast, throughout the initial three years of President Trump’s administration, the nation averaged approximately 176,000 new jobs per month. However, the outbreak of the Covid-19 pandemic resulted in the elimination of over 20 million jobs. Chart 2 displays the annual average monthly job creation rate.



Chart 2.


Source: U.S. Bureau of Labor Statistics


Under Presidents Biden and Trump, the unemployment percentage is more or less the same and stable. The lowest rate of unemployment in the last 8 years was recorded in 2022 at 3.5%. The average rate for January and February 2024 is about 3.8%. Under Biden’s administration, the unemployment rate among Hispanic people, black women and people with disabilities has reached record lows. Chart 3 presents the average annual rate of unemployment in the U.S. for 2017-2024.



Chart 3.


Source: U.S. Bureau of Labor Statistics





Inflation posed a significant challenge for the Biden administration. Prices have risen rapidly since the pandemic, causing the highest inflation rates the country has seen in over four decades. Specifically, inflation averaged 9% in the second quarter of 2022. The surge in prices predominantly impacted sectors such as food, fuel, automobiles, real estate, and health services. Inflation only neared the 3% mark in the fourth quarter of the previous year. Despite the tightening monetary policy by the Federal Reserve, the rise in prices has increased dissatisfaction with the Biden administration, as price stability, with inflation within the target of 2%, is an important priority for Americans. Chart 4 presents the average quarterly inflation in the U.S. for 2017-2023, where it can be seen that inflation under the Trump administration was indeed within 2%, although it started to increase from the first half of 2021.



Chart 4.


Source: U.S. Bureau of Labor Statistics



When discussing inflation, it is crucial to highlight fuel prices, whose stability holds significant importance for Americans. Fuel prices are affected by a number of factors, and presidents do not have much leverage to influence them. During Trump’s administration, fuel prices were generally lower, which may be one reason why Americans felt better about the economy’s health then. Since 2020, the Covid pandemic, Russia’s invasion of Ukraine, fluctuating market demand, and decisions by OPEC+ member states have made fuel prices volatile and unpredictable. Where, for example, from 2017 to 2020, the average price of a gallon of fuel was 2.5 USD, in June 2022, its price exceeded 5 USD. In 2023, the average price of a gallon of gasoline was 3.52 dollars. The price of fuel does have an impact on how the American people feel about the economy and their well-being. Chart 5 presents the average annual fuel prices for 2017-2024.



Chart 5.

Source: U.S. Energy Information Administration



Homeownership is a primary method through which people in the U.S. accumulate wealth. Since the latter half of 2020, there has been a dramatic increase in house prices. On one hand, this surge in house prices posed a disadvantage for individuals looking to purchase a home, while on the other, it benefitted existing homeowners by increasing the value of their properties. Overall, buying a home has become much more difficult under the Biden administration. From the summer of 2020 to the fall of 2022, house prices increased by an average of 49%. In 2023, prices stabilized to some extent, approaching an average of 400 thousand dollars, though this figure remains substantially high compared to the pre-pandemic period. Along with this, mortgage interest rates have increased, rising from 3.6% to 7.9% over the past eight years. Chart 6 presents the median quarterly house prices in the U.S.


Chart 6.

U.S. Department of Housing and Urban Development



Real Wages


During Biden’s administration, in the U.S., the rate of wage growth has not kept pace with inflation. Interestingly, the increase in wages at the beginning of the pandemic was due to the fact that many people who were employed in relatively low-wage positions and were more vulnerable to economic shocks lost their jobs, so the average wage increased because it only reflected the high-wage population. And when that low-wage population was re-employed, this rate began to fall again. Consequently, the income earned by the majority of working Americans lost purchasing power, as their wages were insufficient to offset the heightened costs of goods and services that had been brought on by inflation. Chart 7 presents the quarterly average median real wages in the U.S., 2017-2023.



Chart 7.


Source: U.S. Bureau of Labor Statistics



Monetary Policy


Decisions made by the Federal Reserve System have a significant impact on the performance of the economy. To deal with rapidly rising inflation, the U.S. central bank raised the monetary policy rate 11 times between March 2022 and January 2024, to 5.5% today, the highest rate in the last 23 years. A high interest rate increases the cost of borrowing money and slows down the economy, but it is a powerful lever to curb inflation. For example, mortgage interest rates are currently in the 7.5-8% range, personal loans are in the 12% range, and credit card rates are in the 20% range. Graph 8 presents the average quarterly monetary policy rates in 2017-2023.


Chart 8.


Source: U.S. Federal Reserve System



At a glance, the U.S. economy appears strong under President Biden’s administration – with a rapid post-pandemic economic recovery, low unemployment, low inflation rate, and other positive indicators distinguishing its performance from that of the European Union, the United Kingdom, and Japan. Conversely, the American people’s perception of their own economic well-being is notably pessimistic, a sentiment corroborated by numerous studies. President Biden has pointed out that media portrayal plays a negative role in shaping public perceptions of economic well-being, arguing that it inadequately highlights America’s economic accomplishments.


Significantly, the American population has experienced inflation rates that outpace their wage growth, even as wages have recently exceeded pre-pandemic levels. This discrepancy leads to a perceived decline in economic well-being for the average American, which consequently amplifies negative attitudes toward the nation’s economic health. Conversely, a notable factor is the income inequality among the population, which saw a relative decrease in 2020 and 2021, largely attributed to President Biden’s economic stimulus packages. However, this trend reversed significantly in 2022, with income inequality rising dramatically once again.


Furthermore, when examining the supplemental poverty rate, which considers both financial and non-financial benefits, alongside the official poverty rate, it becomes evident that the cost of living has grown due to inflation. Currently, this rate is higher than it was when President Biden assumed office. Although the overall economic growth appears positive, the difference between wage increases and rising prices, coupled with a widening wealth gap, implies that only a small segment of Americans are gaining the benefits of the economic expansion seen during Biden’s presidency. This disparity explains why many Americans harbor negative perceptions regarding their own economic well-being.


Thus, despite the expansion of the United States’ economy, the majority of individuals have not experienced the benefits because of the rates of inflation and wage growth. Ultimately, the prevailing sentiment among the population significantly shapes their decisions and perspectives on economic matters. Sentiment regarding Biden’s economy was at its lowest in June 2022, when fuel prices skyrocketed. Subsequently, there have been some improvements, but sentiments and expectations remain less optimistic compared to the tenure of the Trump administration. Thus, while the decreasing rate of inflation this year and the increase in wages compared to the pre-pandemic rate may foster expectations of improved sentiment among the U.S. population, the extent to which these factors will positively influence Biden’s prospects in the November 5 election remains uncertain.