How Biden and Trump Boosted Inflation — What Will Happen to Your Money Under Trump This Time?
Written by
T. Woods
Edited by
Zuri Anderson
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Inflation tends to be a primary concern of American voters and consumers, as inflation rates can make are what cause prices on retail items, vehicles, groceries, gas and more to rise or fall.
As Investopedia notes, “a president’s actions can play a role in influencing inflation,” though due to the innate complexities of the American economic system, as well as inflation itself, “the relationship between policies and prices is not always straightforward.”
That said, for those consumers wishing to predict how President-elect Donald Trump’s upcoming second administration will impact inflation rate, it helps to chart the recent history of inflation to perhaps better understand where it will go in the near future.
What Was Inflation Like During Trump’s First Term?
The average year-over-year (YOY) inflation rate during President-elect Trump’s first administration was a fairly low 1.9%.
Despite a severe (albeit brief) recession due to the COVID-19 pandemic and the subsequent state of emergency declared by the administration (leading to things like the Coronavirus Aid, Relief and Economic Security [CARES] Act), Trump managed to have the fourth-lowest inflation rate of any president since Dwight D. Eisenhower’s 1953 to 1961 presidency.
This is despite such complicated economic factors as the aforementioned COVID-19 pandemic, as well as the nearly $80 billion in new taxes, per the Tax Foundation, imposed after Trump levied tariffs on $380 billion worth of imported products in 2018 and 2019.
Inflation During Biden’s Administration
Conversely, the average YOY inflation rate during Joe Biden’s presidency has been the third-highest for any president since Eisenhower, at 5.2% compared to Trump’s average YOY of 1.9%.
That said, many of the factors associated with Biden’s relatively high YOY inflation rate had little to do with Biden himself.
As Investopedia has reported, Biden had to sign the $1.9 trillion American Rescue Plan Act stimulus package in 2021, and had to contend with spiking gas prices in the wake of Russia’s 2022 invasion of Ukraine. Consequential circumstances such as these forced inflation levels to their highest increase in 40 years, hitting 9.1% in June of 2022.
While inflation rates under Biden have been high, CNN has reported a steady slowing in inflation rates in 2024, with a slight bump in October due to “stubborn housing-related inflation.”
The Bottom Line
As such, if that trend continues, and recent history is any guide, it’s likely that inflation rates may continue to soften in the early days of Trump’s second administration.
But keep in mind: Some economic critics, such as economist Larry Summers, have threatened that Trump’s 2024 campaign promises of high tariffs and mass deportations could cause “an inflation shock significantly greater than the one the country suffered in 2021.”
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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