Economics Will Define 2024 Election: Comparing Trump And Biden Presidencies

As the presidential race heats up, many voters wonder which of the two candidates is best fit to steer the U.S. economy for the next four years.

While voters continue to voice valid concerns about President Joe Biden's ability to serve a second term due to his age, Donald Trump received a reprieve this week as the Supreme Court granted him partial immunity for actions taken during his presidency.

However unpredictable the outcome of the upcoming presidential election might be, a good predictor can be found in the country's economic performance during each of the president's time in office.

Bidenomics Vs. Trumponomics: Who Wore it Best?

Lead economic indicators can help understand how presidential decisions shaped the country’s course during the Trump years (2016-2020) and through Biden's ongoing term, which began in 2020.

Although the two candidates have different views on key policies, certain economic markers have remained consistent across both presidencies.

A strong labor market was one of the defining traits of both presidencies, when ruling out disruptions caused by the pandemic. The jobless rate was about 3.6% in 2019 when Trump took office, and after settling back from a pandemic peak of 14.8% during April 2020, if held steady under 4% for the past two years, hitting its lowest point at 3.4% during Biden's term.

Economic growth, as measured by changes in Gross Domestic Product, also kept a relatively steady course through both administrations at between 2.3% and 2.7% on a quarterly basis when excluding the pandemic-led recession and its recovery period.

The unusual months marked by the COVID-19 pandemic present the biggest challenge in comparing the economic performance of both presidencies. The initial impacts of the pandemic became widespread during the final months of Trump's term, while most disruptions extended into Biden's presidency, where they eventually unfolded and led to a return to normality.

This fact means that all economic data needs to be taken with a grain of salt, as Biden inherited a government largely hit by pandemic disruptions, which also means that the outstanding rates of growth seen during 2021 and 2022 cannot be attributed solely to Bidenomics, but are a consequence of a predictable post-pandemic rebound.

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Inflation and tariffs: Biden presided over the largest inflationary period of recent decades, with prices rising by at least 20%. In contrast, inflation only reached 5% during the entire Trump era.

Yet it would be too quick to assume Trump would be better at fighting today's sticky inflation than a second Biden term. Many of the causes for the latest inflationary trend can be attributed to outside factors including supply chain shortages and labor disruptions from the pandemic, which were later increased by geopolitical events like the Russian invasion of Ukraine and its impact on global energy prices.

Pandemic-era aid packages also contributed to rising inflation, according to pundits, but these were approved by both administrations and were largely legislative efforts, not purely executive measures.

On Tuesday, one Jefferies analyst said that a Trump win would mean "stronger growth and higher inflation," with the Fed deciding to stick with higher interest rates for a longer period of time.

A key difference in the policy decisions for both presidents comes up in the way they implemented tariffs on foreign goods. While both are favoring increased taxation on imports for the future, specially on those coming from China, Biden's strategy has been set on protecting specific strategic industries, like EVs, semiconductors and green energy, Trump favors increasing tariffs across the board.

This could have an effect on how the country recovers from inflation, which continues above the ideal 2% measure and reached 3.3% in May, down one basis point from the previous month.

A Trump plan to raise tariffs on U.S. imports by 10% and 60% on all imports from China, was referred to by a Goldman Sachs analyst on Tuesday as a sure-fire way to increase inflation and raise the odds of a tougher trade war with China.

Another key difference between the two leaders comes in their views on how to finance the government by taking on different strategies, from taxation to debt acquisition. While Trump favored tax cuts and significant government borrowing, Biden has referred to plans to increase corporate taxes. In the previous terms, Trump took approximately twice as much debt as Biden. 

The U.S. now presents one of the largest deficits in history, with public debt equaling approximately 122% of GDP and both plans are expected to lead to large deficits for the coming years, as per Bankrate.

Swing States: With most polls on the election placing the result on a tight margin, it might be up to voters in swing states like Michigan, Wisconsin, Georgia, Arizona, Nevada, Pennsylvania and North Carolina to define the results.

A recent CBS poll had voters in swing states report that the economy will be a major issue when choosing the next president. Real household income has dropped in most of these states since the pandemic, putting pressure on Biden to answer for their loss in purchasing power.

Housing prices are another pain point for Biden in swing states. Rent and home prices have skyrocketed since the pandemic in major urban centers across these states, according to data collected by Reuters.

While the Biden administration took on the monumental task of leading a recovery from the pandemic recession, voters in key states won't necessarily reward his policies when seeing that their situation might be worse off in net terms when compared to the time Trump was in office.

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Image created using artificial intelligence via Midjourney.