By Kenny Christianson
Assistant Professor of Economics, Binghamton University

After four days of watching the Trump Coronation (or Republican National Convention) on C-SPAN, one fact became painfully obvious – Republicans can’t dance. They are not so great at macroeconomics either.

Speaker after speaker commented on how great the economy was during the Trump Administration, and how terrible everything has been under Biden. On the first day, Kristi Noem, the Governor of South Dakota and dog-killer, sounded the day’s theme of “Make America Wealthy Again.” (1) Yet there was no decline in household wealth during the Biden Administration. In the four years of the Trump Administration, US household net worth increased by 40.35%. In the first three years of the Biden Administration, US household net worth increased by 17.78%. (2) This represents a decline in the rate of growth of household net worth, but not the decline in wealth as implied by the Republicans.

On the second night, Florida governor Ron Desantis told us that Republicans “stand for fiscal sanity, for low taxes, and for reduced debt.” (3) Yet under Trump, the United States experienced the largest budget deficits in our country’s history. In 2020, the last year of Trump’s presidency, the federal government had a budget deficit of $3.13 trillion, an historical record. By 2023, Biden had been able to cut that number in half. (4)

On night three, Donald Trump Jr. took the stage to complain about inflation. That became a common theme for the rest of the convention. Donald Jr. said “Housing costs, gasoline prices, grocery bills just keep going up.” (5) The last night of the convention, son Eric repeated this theme: “Energy prices are soaring, interest rates are crippling, everything is unaffordable. The US dollar has been diminished. Inflation has made it impossible for Americans to live, to save for their future.” (6). Even Hulk Hogan joined the chorus: “the price of food and gas, and housing is out of control, and the only person who can clean this up is Donald Trump.” (7)

While it is true that inflation has been a problem during the Biden years, it is important to remember one important and simple economic fact: both fiscal and monetary policy work with significant lags. The economy we have today is the result of policy choices made years ago, and external events beyond the control of any president. Our recent inflation had four main causes: increased spending from the Trump tax cuts and Covid stimulus payments, increased spending from pent-up demand after Covid, increased costs from Covid supply-chain disruptions, and increased costs due to the war in Ukraine. None of these were directly the fault of Joe Biden.

For the record, inflation as measured by the Consumer Price Index was 2.5% when Trump took office in January 2017. In January 2021 it was 1.4%, still low due to the shutdown, and then climbed to 9% in June 2022. Since then the Federal Reserve has increased interest rates to combat high rates of inflation. Currently (June 2024), the CPI inflation rate is 3% annually, close to the Federal Reserve’s goal of 2%. In June the monthly change in the CPI was -0.1%, so we are starting to gain control of inflation, despite the Republicans’ pessimism. (8)

Finally, we turn to Trump’s acceptance speech itself, which contained more lies than Swiss cheese has holes. Trump said:

Just a few short years ago under my presidency, we had the most secure border and the best economy in the history of our country, in the history of the world. We had the greatest economy in the history of the world. … We had no inflation, soaring incomes, we’re going — …

Inflation has been a killer for our country. No matter what you’re making, it doesn’t matter because inflation is eating you alive. … Inflation, remember, it’s called a country buster. You can go back to Germany from 100 years ago. You can go back to any country that’s suffered great inflation. We’ve suffered the worst inflation we’ve ever had. But go back and see what’s happened to those countries. We’ve had the worst inflation we’ve ever had under this person. (9).

To assess the health of an economy, macroeconomists generally rely on measures such as Gross Domestic Product (GDP) or labor market conditions. As for GDP, Trump presided over the largest contraction in US history. GDP declined by 28% in the second quarter of 2020. Overall, GDP increased by an average of 1.45% per year during the four years of the Trump presidency. So far, in the first three years of the Biden Administration, GDP growth has averaged 3.4%. (10)

As far as nonfarm payroll employment, when Trump took office in January 2017, the US economy had 145.636 million jobs. When he left office in January 2021, the economy had 142.916 million jobs, a decrease of 2.720 million jobs. (11) In fact, Donald Trump is the first president since Herbert Hoover to leave office in an economy with less jobs than when he started. (12). This is hardly the “greatest economy in the history of the world.” In contrast, the US economy currently has 158.723 million jobs, so jobs have increased by 15.807 million since Biden has been President. (13)

Trump states that “inflation is eating you alive”. This would be true if nominal wages were stagnant, but they are not. In June 2024, the annual CPI inflation rate was 3.0%, but average hourly earnings increased annually by 3.8%. (14) The purchasing power of wages has been increasing recently, not declining as Trump claims.

Finally, Trump wants us to believe that ”We’ve had the worst inflation we’ve ever had under this person.” As mentioned earlier, the CPI inflation rate reached a peak of 9.0% under Biden. In April 1980, that same measure of inflation was at 14.6%. (15) Just another Trump lie.

1. https://www.argusleader.com/story/news/politics/2024/07/15/transcript-south-dakota-gov-kristi-noems-2024-rnc-speech/74416343007/
2. https://fred.stlouisfed.org/series/BOGZ1FL192090005Q
3. https://www.rev.com/blog/transcripts/ron-desantis-speaks-at-rnc-2024-night-two
4. https://fred.stlouisfed.org/series/FYFSD
5. https://www.rev.com/blog/transcripts/don-trump-jr-speaks-at-rnc-2024-night-three
6. https://www.rev.com/blog/transcripts/eric-trump-speaks-at-rnc-2024-night-four
7. https://www.rev.com/blog/transcripts/hulk-hogan-speaks-at-rnc-2024-night-four
8. https://data.bls.gov/timeseries/CUSR0000SA0&output_view=pct_1mth
9. https://www.nytimes.com/2024/07/19/us/politics/trump-rnc-speech-transcript.html
10. https://www.bea.gov/itable/national-gdp-and-personal-income
11. https://data.bls.gov/timeseries/CES0000000001&output_view=net_1mth
12. https://www.washingtonpost.com/business/2021/01/08/trump-jobs-record/ 13. https://data.bls.gov/timeseries/CES0000000001&output_view=net_1mth 14. https://data.bls.gov/timeseries/CES0500000003&output_view=net_1mth 15. https://data.bls.gov/timeseries/CUSR0000SA0&output_view=pct_1mth