An Economic Baker’s Dozen: The Economics Behind President Trump’s Re-election
By Dr. Timothy G. Nash, Jim Hop, Dr. Thomas Rastin, and Anthony Storer
An objective and bipartisan review of key economic data is needed to understand the results of the fall 2024 U.S. presidential election. Below, we evaluate 13 key indicators impacting the U.S. economy and their role in the re-election of President Donald Trump.
1. Inflation: This was one of the defining issues of the Biden administration. Over four years, cumulative inflation reached 20.66%, translating to an annualized rate of 5.16%. In contrast, during the Trump administration, inflation was significantly lower, with a cumulative rate of 7.26% and an annual average of 1.815%. Despite Biden’s early assurances that inflation would be “transitory,” it remained persistent and weighed heavily on U.S. households.
2. Real Income: According to the U.S. Census Bureau, during Trump’s first term, inflation-adjusted median household income rose by $4,460, or $1,115 annually — a cumulative increase of 5.9%. Under Biden, real median household income grew by only 1.7%, an increase of $1,350 or just $337.50 per year. Wage growth was far lower under Biden.
3. Consumer Sentiment: The University of Michigan’s Consumer Sentiment Index is a key measure of economic confidence. Under Biden, the index averaged 68.6 per month, peaking at 77.6 in 2021 and dipping to 58.6 in 2022. Under Trump, the average was 93.2, including the COVID-19 year of 2020, when sentiment still averaged 81.5. The significant drop under Biden reflected widespread concerns over inflation and economic uncertainty.
4. Small Business Confidence: Small businesses, responsible for employing over 60% of the U.S. workforce, showed stronger confidence during the Trump administration. The Small Business Confidence Index of the National Federation of Independent Business averaged 103.9 under Trump (including 2020) compared to 96.77 under Biden.
5. Prime Interest Rate: This is what banks charge their best corporate customers to borrow money. The Prime Rate is usually reserved for large U.S. corporations with a lower prime interest rate creating a better environment for economic growth and/or economic recovery. The yearly peak prime interest rate average during the four years of the Trump administration was 4.875% with the lowest rate of 3.25% in 2020. The yearly peak prime interest rate average during the four years of the Biden administration was 6.813% with the lowest rate of 3.25% in 2021.
6. Regulatory Burden: The American Action Forum tracks new regulatory costs imposed on businesses. Under Biden, 1,149 new regulations added an estimated $1.8 trillion in compliance costs. By contrast, the Trump administration implemented 1,288 new regulations but at a significantly lower cost of $38 billion. Trump has pledged to reduce regulatory hurdles, particularly those affecting the energy sector, a move that will likely be closely watched in his second term.
7. Unemployment Rate: Biden’s four-year average unemployment rate was 4.17%, peaking at 5.38% in his first year before dropping to 3.63% in year three. However, by the end of 2024, unemployment was rising again, reaching an average of 4.03%.
Trump’s first-term average was 4.86%, heavily impacted by the pandemic-induced peak of 14.8% in 2020. Excluding that year, unemployment under Trump was historically low.
8. GDP Growth Rate: Biden’s average annual GDP growth rate was 3.21%, bolstered by a strong 5.8% first year, likely influenced by post-pandemic recovery. However, growth slowed to 1.9% in 2022, 2.54% in 2023, and 2.45% in 2024. Trump’s average GDP growth was 1.45%, dragged down by a -2.2% contraction in 2020. Excluding that year, GDP growth averaged 2.67% during his first three years.
9. Employment Levels: At the start of Biden’s term, over 150 million Americans were employed. By December 2024, that number had grown to nearly 162 million (the net gain was 11.63 million jobs). However, compared to February 2020’s pre-pandemic level, employment had only grown by 2.9 million. During Trump’s term, employment began at about 152 million employed in January 2017 and peaked at nearly 159 million in February 2020 before plunging to a little more than 133 million in April 2020, due to COVID-19. By the end of 2020, employment rebounded to nearly 150 million, though still below pre-pandemic levels.
10. Border Policy: Illegal border crossings surged under Biden. Since the start of fiscal year 2021, U.S. Customs and Border Protection recorded more than 10.83 million encounters. Encounters under Trump were just over 3 million.
11. Stock Market Performance: A comparison of major stock indices shows that market growth was stronger under Trump. From Jan. 20, 2017, to Jan. 20, 2021, Trump’s market returns outpaced Biden’s in the same period from 2021 to 2025:
• S&P 500: Trump (+69.59%), Biden (+55.68%)
• NASDAQ: Trump (+142.24%), Biden (+45.87%)
• Dow Jones: Trump (+57.30%), Biden (+39.44%)
• Russell 2000: Trump (+59.83%), Biden (+5.33%)
When adjusted for inflation, Biden’s returns were even less competitive:
• S&P 500: Trump (+57.93%), Biden (+29.03%)
• NASDAQ: Trump (+125.59%), Biden (+20.89%)
• Dow Jones: Trump (+46.49%), Biden (+15.56%)
• Russell 2000: Trump (+48.85%), Biden (-12.70%)
12. National Debt: The national debt grew significantly under both presidents. Under Biden, the debt increased by $8.5 trillion, while under Trump, it rose by $7.38 trillion. As a percentage, the debt grew by 31.58% under Biden and 37.7% under Trump. By early 2025, the national debt reached $36.38 trillion, with the Trump and Biden administrations collectively responsible for 46% of it.
13. Foreign Policy: When comparing how the two presidents were likely remembered on foreign policy, President Trump oversaw reductions of U.S. troops from Syria, Iraq, Somalia and Afghanistan, and agreed to a conditional full withdrawal from Afghanistan in 2021. However, President Biden is best remembered for overseeing a difficult withdrawal from Afghanistan in 2021, for managing an elongated war between Russia and Ukraine and failing to settle the current difficulties in the Middle East centered on the conflict between Israel and Hamas.
Conclusion
Despite positive indicators during Biden’s presidency, the broader economic picture — high inflation, diminished consumer confidence, and regulatory burdens — ultimately led voters to favor a return to Trump’s policies.
The American electorate expressed a preference for Trump’s economic management, particularly among consumers and small businesses. Concerns over inflation, border security, and economic growth were decisive factors in Biden’s failure to secure the Democratic nomination and Vice-President Kamala Harris’s loss in the general election.
As President Trump returns to office, the focus shifts to whether he can reinvigorate economic growth while simultaneously reeling in government spending and the national debt. The expectations are high, and the challenges ahead are significant. Once again, it is up to President Trump to deliver on his promises.
About this Piece
This piece was featured in the 2025 edition of When Free to Choose, Northwood’s signature complimentary publication dedicated to promoting free enterprise. Click here to subscribe.