The Economic Impact of Donald Trump’s Presidency

Donald Trump’s impact on the economy: an overview

Donald Trump’s economic policies during his presidency were mainly characterized by tax cuts, trade wars, tariffs, deregulation, and restrictions on immigration.

The Tax Cuts and Jobs Act (TCJA) — one of the best-known aspects of the Trump administration’s economic plan — lowered corporate and individual tax rates, though many of its reforms expire in 2025. Meanwhile, Trump’s tariffs on thousands of products His trade war with China has also become a major part of his economic legacy. Trump’s deregulation policies specifically included rolling back environmental rules, including those governing clean air and water.

Trump and his administration have claimed credit for much of the economic success during his presidency, including a booming economy before the pandemic-induced lockdowns and recession. However, critics have pointed out that much of the economic progress he refers to was inherited from the administration of former President Barack Obama.

Unemployment rates, job growth, and GDP growth have all seen progress in the wake of the Great Recession under Obama’s leadership. These aspects of the economy continued to grow when Trump took office until early 2020.

Economic achievements during the era of Donald Trump

Under the Trump presidency, the economy strengthened and the unemployment rate fell in the run-up to the pandemic in 2020. The Tax Cuts and Jobs Act (TCJA) — a comprehensive overhaul of the tax code — had some positive effects in its early years, such as increasing consumer spending. The stock market also set new records in the run-up to the pandemic and the easing of lockdowns.

Stronger economy

Before the COVID-19 pandemic, the economy under Trump remained strong, with low inflation and job growth. However, many academics pointed out that this was a continuation of the economic expansion after the Great Recession seen under the Obama administration, so Trump inherited the strong economy from his predecessor.

Creating job opportunities

By the end of Obama’s presidency, the US economy had experienced 76 consecutive months of job growth, and this streak continued into Trump’s presidency. In 2019, the unemployment rate fell to its lowest level in 50 years, 3.5%. The low unemployment rate continued until February 2020, when the pandemic struck. Wage growth also rose in 2018 and 2019.

Tax deductions

The Tax Cuts and Jobs Act, which took effect in 2018 after Trump signed it into law, was the largest overhaul of the tax code in 30 years. The law provided a corporate interest rate of 21% and a tax treatment that benefited pass-through companies.

While many of the reforms expire in 2025, the TCJA affected income tax rates, the standard deduction, the personal exemption, the health coverage mandate, tax credits and more for individual taxpayers. Studies show that the legislation was likely to boost economic growth by increasing American capital investment and increasing spending as individuals had more after-tax income to spend in the first two years of the law taking effect.

Rising stock market

The stock market broke record after record between the time Obama began his term and the pandemic in 2020. While market indexes like the S&P 500 fell sharply during the early months of the pandemic, they recovered and entered a bull market that lasted into 2022. The Dow Jones Industrial Average (DJIA) traded at 30,000 points in 2020 and jumped 57% overall during Trump’s tenure.

Challenges and controversies in the economy during the presidency of Donald Trump

Donald Trump faced many challenges and controversies during his presidency, including in the economic field.

Impact of the COVID-19 pandemic

The COVID-19 pandemic has led to a global recession, some of whose effects are still being felt years later. Initially, real GDP was 9% below its level at the start of the recession. Employment fell by 1.4 million jobs in March 2020 and 20.5 million in April 2020. In the following months, employment gradually rebounded, rising every month that year except December 2020.

Annual deficit

The pursuit of the aforementioned tax cuts — as well as increased defense spending — has led to higher deficits during the Trump presidency. The 2018 fiscal year witnessed a deficit of $779 billion, which jumped to $984 billion in 2019, and more than a trillion dollars in 2020.

Trade wars and tariffs

Trump’s trade policies included applying tariffs to trading partners such as Canada, China, Mexico, and the European Union. The administration said the tariffs would benefit American workers, give the United States leverage in future trade agreements, and protect national security. However, research conducted by the Brookings Institution shows that this did not end up happening. In fact, research published in early 2024 shows that tariffs on various goods from China neither increased nor decreased the number of jobs in the industries they targeted, but also led to tariffs from other countries being imposed as a retaliatory measure, negatively impacting American workers. .

Comparison between Trump’s economy and previous administrations

Trump has run huge national deficits during his presidency, but he is not alone. Barack Obama, George W. Bush, and Trump are the presidents with the largest budget deficits. The national debt rose by 33.1% under Trump, 64.4% under Obama, 72.6% under George W. Bush, and 28.6% under Bill Clinton.

When comparing presidencies, we often look at the impact on the stock market — although presidents tend to have an indirect impact on the economy and the stock market. The S&P 500 is an index often used to measure the performance of the overall US stock market, and presidents are often credited or blamed for how it performed under their leadership. The S&P 500 jumped 69.6% during the Trump administration.

The index also rose by 84.5% during Obama’s first term and 52.9% during his second term. During George W. Bush’s first term, the percentage fell by 12.5%, then it fell by another 31.5% during his second term. During Clinton’s first term, it rose by 79.2% and 72.9% during his second term.

Unemployment and job growth are key indicators for comparing the economy under different presidents. The average unemployment rate under Trump was 5.04%. This compares to 7.41% during the Obama era, 5.31% during the Bush era, and 5.17% during the Clinton era. While Trump was the first modern president to leave office with fewer jobs than when he started, Obama saw 8.6% job growth during his presidency. George W. Bush got 1% and Clinton 20.9%.

Bottom line

While the president certainly influences the economy through legislation and policies, it is important to remember that no single president can take full credit or blame for the overall state of the economy. There are many factors that affect the performance of the economy, including actions taken by the Federal Reserve, major events such as war or a pandemic, and more.

However, a review of the country’s economic performance during the term of office of the President of the United States is common. Under Trump, the economy continued the strength it showed under the Obama administration until the 2020 pandemic when the unemployment rate rose dramatically and the stock market fell. Much of his legacy is tied to the COVID-19 response.

Another key aspect of his legacy is the Tax Cuts and Jobs Act (TCJA), and the implications of these tax breaks for businesses and individuals will continue to be studied after many of the reforms expire in 2025. Trump’s impact on US trade policy will also continue to be reviewed by experts for years into the future, as Some say Trump’s trade war with China has undone many of the regulations put in place by his predecessors.

The Trump economy will be under the microscope throughout 2024 as the former president campaigns for a second term, especially as he echoes some of the promises he made in his primary campaign before the 2016 election.