In the years following Ronald Reagan’s presidency in the 1980s, many Americans came to regard inflation as the economic equivalent of smallpox: a scourge largely eradicated.
It wasn’t, obviously. After a 30-year dormant period, inflation reemerged in 2021, becoming the biggest challenge of Joe Biden’s presidency. Inflation has now dropped far below its 2022 peak, but many prices that went up have stayed up, and Americans are peeved about food, rent, and transportation costs that seem to be taking a permanently bigger bite out of their paychecks.
The scarring effects of inflation have fueled a kind of nostalgia regarding Donald Trump’s presidency, from 2017 to 2021. In a recent NBC News poll, 40% of respondents said Trump’s presidency was better than expected, a higher portion saying so than when NBC asked the same question in 2018. Voters consistently say they trust Trump more than Biden on the economy, a crucial deficit for Biden given that the two men are vying for the presidency once again this year.
Fond recollections of the Trump economy aren't the same as a yearning for more of Trump, who led a chaotic response to the COVID pandemic, tried to overturn the 2020 election, and stoked the Jan. 6, 2021, riots at the Capitol. But the pre-COVID Trump economy is now a baseline people measure Biden's performance against. Trump is running on his own economic record, and against Biden's, so the recent past matters in 2024.
Trump inherited a solid economy from President Obama, and the good times continued into 2020. Compared with today, there was no inflation to speak of. Voters who think their paychecks went further under Trump are generally right.
Read more: Inflation update on everyday expenses: Prescription drugs down, pet care way up
The two charts below show inflation in 26 key categories Yahoo Finance has been tracking since 2021. The figures represent total inflation during the first three years of Trump’s presidency and Biden’s. Click on each president’s name to see the data.
Under Trump, overall inflation was just 6.2% during this first three years. Under Biden, it was 17.9%. Rents rose 11.3% under Trump and 19.5% under Biden. Grocery inflation: 2.4% under Trump, 21% under Biden. Transportation, including the cost of vehicles, insurance, maintenance, and gasoline: Up 4.5% under Trump, and up 27.5% under Biden.
There are a couple of areas where inflation is actually lower under Biden than under Trump: healthcare, college tuition, and prescription drugs. That’s probably due to slacking demand for all three during COVID, which is a temporary factor not likely to last.
Real earnings, adjusted for inflation, have also been stronger under Biden. They’ve risen 15.4% in three years, compared with just 9.4% for Trump. Under Biden, however, inflation has risen 2.5 percentage points more than earnings, which means purchasing power is down. Under Trump, earnings outpaced inflation by 3.2 points, so purchasing power is up. This is the real advantage Trump has over Biden: People feel their money buys less than it did four years ago, and the data backs them up.
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Biden can’t refute that fact. What he can do when lobbying for his economic policies is try to convince people of three things: One, inflation wasn’t his fault, given that it was a global phenomenon driven largely by COVID-related shortages and disruptions. Two, things are getting better, not worse. And three, Biden’s economic plan will be better for voters in the future than Trump’s.
Skirting the blame for inflation will be tough. Biden’s campaign message is that greedy corporations are responsible for squeezing consumers, a claim some voters seem willing to accept. Yet inflation happened on Biden’s watch, and some voters think Biden’s hostility to fossil fuels and penchant for big spending set the stage for inflation. At this point, he seems unlikely to change many minds.
Biden may have better luck persuading voters that things are getting better because they actually are. Inflation is down from 8.9% in 2022 to 3.1% now, and shoppers are starting to notice. The University of Michigan consumer sentiment index, which emphasizes inflation when polling respondents, has shot up during the last two months, largely because fears of future inflation are declining. Incomes are now rising by more than inflation, which means Americans will start to feel better off if the trend continues.
As for the best economic plan, Biden and Trump are both running on their records, which seems to favor Trump for those who prioritize economic issues. If inflation continues to abate, voters may give Biden more credit for a strong job market, a boom in factory construction, his efforts to ease student debt burdens, and his insistence that he’ll “finish the job” if voters give him another four-year term. Maybe voters will reminisce fondly about the Biden economy someday.
Read more about the latest inflation data and what it means for markets:
Inflation: Consumer prices rise 3.1% in January, defying forecasts for a faster slowdown
Hot inflation reading reinforces the Fed's cautious approach to rate cuts in 2024
Cost of eating out continues to rise, a potential hit to restaurant chains
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman.
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