As the United States suffers the worst economic downturn in nearly a century, key questions remain: How quickly can the nation recover, and who has the better track record to get us there?
The dire job losses from the spring are close to half recovered, but 13.6 million workers remain unemployed. Stocks are back near record highs, but food bank lines are long and evictions in parts of the country are growing.
The 2020 presidential election will be, at least partly, about the economy. President Trump argues the economy was soaring pre-pandemic and he can bring it back again, while former vice president Joe Biden, the Democratic nominee, argues the nation wouldn’t be in such bad shape if Trump hadn’t fumbled the handling of the pandemic. Biden says he can get people working again and points to the Obama administration’s track record after the Great Recession. Trump portrays the Obama era as sluggish.
Perhaps the best case Trump can make for improvement since he took office is higher wages and a boost in confidence. The average worker’s pay finally grew more than 3 percent a year under Trump, and there was a drop in the number of Americans on food stamps. Consumer and business confidence also jumped after Trump’s election and remained high after the GOP tax cuts took effect in 2018. As recently as February, many Americans rated this as the best economy since the late 1990s. Now those gains are wiped out.
The pandemic recession triggered more than 22 million job losses, modern-day bread lines and millions of pay cuts. Even before the pandemic hit, the picture was mixed. Manufacturing, business investment and growth were slowing noticeably heading into 2020.
While there’s ongoing debate about how much influence presidents really have over the economy, the charts below illustrate the trends under then-President Barack Obama and Trump.
1. Job gains (and losses)
The United States experienced some of its best years of job gains in 2014 and 2015 in Obama’s second term when the economy added more than 225,000 jobs a month. Employment continued to be strong under Trump — until the pandemic hit.
Average monthly job gains under Trump peaked at 193,000 in 2018. Economists call this very robust, especially given the recovery was nearly a decade old by then. But the devastation from the pandemic wiped out a decade’s worth of jobs gains in the spring. By August, 48 percent of the jobs had returned.
2. Economic growth
Trump says he had the “greatest economy in history” during the GOP convention, a claim fact-checkers quickly marked as false. A look at economic growth shows why.
The economy grew just shy of 1 percent in Obama’s first term when the Great Recession took its toll. Growth improved to 2.3 percent in Obama’s second term. Under Trump, the economy is on track to average slightly above zero in his first term because of the sharp losses from the pandemic.
Excluding 2020, growth in Trump’s initial three years in office was 2.5 percent — barely above Obama and well below the growth under the Clinton, Reagan and Johnson administrations.
3. U.S unemployment
The U.S. unemployment rate hit a half-century low of 3.5 percent in late 2019 and stayed around that level through February 2020. Trump frequently touted the job news, though he often left out that the unemployment rate was a fairly low when he took office (4.7 percent) and has been steadily declining since 2011.
As the pandemic escalated, Trump and other officials opted to close down much of the economy to keep people home to slow the spread of the deadly coronavirus. This caused the official unemployment rate to soar to nearly 15 percent in April. The Labor Department had trouble doing its usual worker surveys during the pandemic and says the unemployment rate likely reached as high as 19.7 percent — a level not seen since the Great Depression. But as the economy reopened, many jobs came back. By August, the unemployment rate had fallen to 8.4 percent, a level that’s still high but not unprecedented.
4. Black unemployment rate
Trump has started making the claim that his administration has done more for African Americans than “any president since Abraham Lincoln,” which The Washington Post Fact Checker gave Four Pinocchios. A key part of Trump’s argument is the Black unemployment rate, which hit the lowest level ever recorded — 5.4 percent — in August 2019. (The Labor Department began tracking the Black rate in 1972).
When Trump took office, Black unemployment was 7.5 percent. Many of the job gains under Trump did go to Black and Hispanic workers, especially women. As the labor market tightened, many employers gave a chance to workers they were not looking at before, such as those without college degrees. The pandemic, however, has hit Black and Hispanic workers the hardest, erasing many of the gains it took years to see after the Great Recession. In August, the Black unemployment rate was 13 percent.
5. Middle-class income
Middle-class households were hit hard during the Great Recession. For years, their incomes remained lower than in the late 1990s, once the cost of living was taken into account. While incomes rose the most during the final two years of Obama’s term, median household income did not officially equal its 1999 level until 2018, according to the U.S. Census.
Economists generally credit Obama with getting the recovery solidly underway and Trump with keeping it going until the pandemic recession. The steady job and pay gains in recent years have been the biggest drivers of rising middle-class incomes.
6. U.S stock market
One of Trump’s favorite indicators is the U.S. stock market. Even with the deep blow of the pandemic that caused a 30 percent drop in stocks in March, the market has come roaring back this summer. The Standard & Poor’s 500-stock index recently surpassed its pre-pandemic record level thanks largely to surging tech stocks such as Apple, Facebook, Amazon, Netflix, Microsoft and Google’s parent, Alphabet. The index has fallen some in the past week.
Many economists are quick to point out the stock market is not the economy. Analysts also note that stocks gained more in Obama’s first term than Trump’s. But that comes with a caveat: Stocks began Obama’s presidency in a deep slump from the financial crisis and then began an epic rebound a few weeks into his presidency. The market was already high when Trump took office and has climbed higher since then. Though Obama had better market gains, both presidents have been good for Wall Street.
7. Food stamps
While the stock market was quick to soar under Obama, many people were quick to point out that the United States still had record numbers of Americans on food stamps, a sign of the lingering pain of the Great Recession. By 2013, roughly 1 in every 6 Americans was on government food aid. That declined only slightly by the end of Obama’s tenure.
The Trump administration made it a goal to get the number of Americans on food stamps down, including by tightening rules about who is eligible for food aid. As a result of more stringent eligibility rules and more job gains in recent years, the number of Americans on food stamps dropped to 35.7 million in 2019 — the lowest level since 2009. The pandemic has ushered in deep hardship again, causing many Americans to seek food stamps and visit food banks for the first time. Photos of long lines of cars waiting outside food banks during the pandemic have been dubbed modern-day bread lines.
8. Manufacturing output
The end of Obama’s second term saw a mini manufacturing recession that deeply hurt blue-collar workers even as the service economy continued to chug along. Trump vowed to revive factories. Early on in his presidency, manufacturing jobs and output jumped. In 2018, manufacturing jobs were growing at the fastest clip since the early 1980s. But it didn’t last.
Manufacturing output and jobs stalled in 2019, an early warning sign of economic trouble. The pandemic was a major blow. Real-time indicators show some rebound in manufacturing, especially as auto sales and home sales have bounced backed. But manufacturing employment remains more than 700,000 jobs below pre-pandemic levels.
9. U.S home prices
Home prices have been on a steadily upward climb even since bottoming out in 2011. A lot of this growth has been driven by the Federal Reserve. The Fed has kept interest rates low, which has led to historic lows in mortgage rates that have made home-buying more affordable for many families (as long as they have savings for a down payment).
Even the pandemic didn’t put much of a dent in home purchases. In fact, some city dwellers have been rushing to the suburbs in search of bigger homes with more space. That trend, combined with a surge in millennials buying homes and mortgage rates below 3 percent, have fueled a housing boom. The median home price in the United States hit $304,100 in July, according to the National Association of Realtors. It’s the highest price on record, surpassing the prior 2006 high in inflation-adjusted terms.
10. U.S government debt
Both Obama and Trump have been criticized for growing the national debt. Spending increased under Obama as the federal government tried to revive the economy after the Great Recession, as well as fund the ongoing wars in Iraq and Afghanistan and continuing most of the Bush tax cuts.
Trump’s 2017 tax cut added about $1.5 trillion more to the debt, contrary to claims by the president’s administration that it would not. Then the pandemic hit and Congress responded with more than $3 trillion in aid. The result is the national debt is at the highest levels since World War II. The closely watched debt-to-GDP ratio, a sign of how big U.S. debt held by the public is relative to the economy, is on track to surpass 100 percent in the coming months.
Many economists say the bulge in spending after the Great Recession and pandemic recession were necessary and unavoidable, but they fault Obama and Trump for not doing more to right the federal budget during the good economic years.
11. Consumer confidence
Consumer spending drives about 70 percent of the U.S. economy. Many economists and business leaders closely watch signs of consumer confidence to see if Americans are likely to keep buying. The two main gauges of consumer confidence are monthly surveys by the Conference Board and the University of Michigan. Both showed an increase in confidence after Trump’s election, largely because Republicans and independent voters rated the economy more highly.
As the unemployment rate continued to decrease, confidence hit levels not seen since the late 1990s in early 2020. Though much of the economy under Trump looked similar to under Obama, many Americans appeared to feel better about their job and business prospects. Then the pandemic hit, causing confidence to tank. Nearly 1 in 3 Americans now worries about losing their job, according to Gallup.
While the economy did a big U-turn under Obama, his administration admitted that its “unfinished business” was seeing wages grow faster again. When the economy is performing well, it’s usually hard for employers to find enough workers, and they start lifting pay by more than 3 percent a year. That did not happen in the Obama era. It took until the summer of 2018 to finally see average hourly earnings rising above 3 percent.
13. Gas prices
Gas prices were well above $3 a gallon for much of Obama’s tenure. Many Americans see these prices as they drive to work, and it influences their overall feeling about the economy. As prices rise, they tend to feel gloomier as gas costs eat into their weekly pay. But oil prices plunged in 2014 as the world’s major oil-producing countries, such as Saudi Arabia, refused to cut back production, leading to a glut of oil on the world market.
When Trump took office, gas prices were just $2.37 a gallon, on average. They have remained low throughout Trump’s first term, helping keep costs manageable for many Americans. Though Trump likes to tout that America is now “energy independent” because it exports oil again, the reality is the nation still depends on imports of crude oil from abroad. The rise and fall of gas prices are largely driven by the world market and power players like Saudi Arabia that have continued to pump cheap oil.
14. Americans with health insurance
Obama made it one of his top goals to get more Americans covered by health insurance. The number of Americans lacking health insurance went from more than 48 million people in 2010 down to 28 million after the passage of the Affordable Care Act.
The uninsured rate has remained low under Trump, though it ticked up slightly after Trump did away with the penalty for American adults who don’t buy health insurance. Trump also made it a goal to repeal the Affordable Care Act, but that has not happened in his first term.
15. Business investment
An ongoing problem for the U.S. economy in recent years has been sluggish business investment. The economy tends to perform better when firms spend more on new research, products and equipment, since that tends to lead to more innovation.
Business investment was slow at the end of Obama’s second term. Trump and many Republicans said their 2017 tax cut would spur a business investment boom. Though 2018 did see improved business investment, the bump was short-lived. Business investment was anemic again in 2019, even before the pandemic’s economic blow.
16. Trade deficit
Most economists paid little attention to the trade deficit before Trump ran for office. The United States has purchased more goods from abroad than it has sold for years, largely because American consumers like to shop. Economists didn’t worry about this because foreign nations would turn around and invest in the U.S., so the dollars typically came back, one way or another.
But Trump insisted deficits were a sign of weakness. He promised his trade deals would get the deficit back down. What happened instead is the overall trade deficit in 2018 was the largest in a decade.
The trade deficit is on track to come down in 2020 but not for particularly encouraging reasons. Trade deficits tend to shrink during recessions, as Americans save more and shop less.