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WASHINGTON (AP) — It was a time of fear and chaos four years ago.
The death count was mounting as COVID-19 spread. Financial markets were panicked. Oil prices briefly went negative. The Federal Reserve slashed its benchmark interest rates to combat the sudden recession. And the U.S. government went on a historic borrowing spree — adding trillions to the national debt — to keep families and businesses afloat.
But as Donald Trump recalled that moment at a recent rally, the former president exuded pride.
“We had the greatest economy in history,” the Republican told his Wisconsin audience. “The 30-year mortgage rate was at a record low, the lowest ever recorded ... 2.65%, that’s what your mortgage rates were.”
The question of who can best steer the U.S. economy could be a deciding factor in who wins November’s presidential election. While an April Gallup poll found that Americans were most likely to say that immigration is the country's top problem, the economy in general and inflation were also high on the list.
Trump may have an edge over President Joe Biden on key economic concerns, according to an April poll by The Associated Press-NORC Center for Public Affairs. The survey found that Americans were more likely to say that as president, Trump helped the country with job creation and cost of living. Nearly 6 in 10 Americans said that Biden’s presidency hurt the country on the cost of living.
But the economic numbers expose a far more complicated reality during Trump's time in the White House. His tax cuts never delivered the promised growth. His budget deficits surged and then stayed relatively high under Biden. His tariffs and trade deals never brought back all of the lost factory jobs.
And there was the pandemic, an event that caused historic job losses for which Trump accepts no responsibility as well as low inflation — for which Trump takes full credit.
If anything, the economy during Trump's presidency never lived up to his own hype.
Trump assured the public in 2017 that the U.S. economy with his tax cuts would grow at “3%,” but he added, “I think it could go to 4, 5, and maybe even 6%, ultimately.”
If the 2020 pandemic is excluded, growth after inflation averaged 2.67% under Trump, according to figures from the Bureau of Economic Analysis. Include the pandemic-induced recession and that average drops to an anemic 1.45%.
By contrast, growth during the second term of then-President Barack Obama averaged 2.33%. So far under Biden, annual growth is averaging 3.4%.
Trump also assured the public that his tax cuts would pay for themselves because of stronger growth. The cuts were broad but disproportionately favored corporations and those with extreme wealth.
The tax cuts signed into law in 2017 never fulfilled Trump's promises on deficit reduction.
According to the Office of Management and Budget, the deficit worsened to $779 billion in 2018. The Congressional Budget Office had forecasted a deficit of $563 billion before the tax cuts, meaning the tax cuts increased borrowing by $216 billion that first year. In 2019, the deficit rose to $984 billion, nearly $300 billion more than what the CBO had forecast.
Then the pandemic happened and with a flurry of government aid, the resulting deficit topped $3.1 trillion. That borrowing enabled the government to make direct payments to individuals and small businesses as the economy was in lockdown, often increasing bank accounts and making many feel better off even though the economy was in a recession.
Deficits have also run high under Biden, as he signed into law a third round of pandemic aid and other initiatives to address climate change, build infrastructure and invest in U.S. manufacturing. His budget deficits: $2.8 trillion (2021), $1.38 trillion (2022) and $1.7 trillion (2023).
The CBO estimated in a report issued Wednesday that the extension of parts of Trump’s tax cuts set to expire after 2025 would add another $4.6 trillion to the national debt through the year 2034.
Inflation was much lower under Trump, never topping an annual rate of 2.4%, according to the Bureau of Labor Statistics. The annual rate reached as high as 8% in 2022 under Biden and is currently at 3.4%.
There were three big reasons why inflation was low during Trump's presidency: the legacy of the 2008 financial crisis, Federal Reserve actions and the coronavirus pandemic.
Trump entered the White House with inflation already low, largely because of the slow recovery from the Great Recession, when financial markets collapsed and millions of people lost their homes to foreclosure.
The inflation rate barely averaged more than 1% during Obama's second term as the Fed struggled to push up growth. Still, the economy was expanding without overheating.
But in the first three years of Trump's presidency, inflation averaged 2.1%, roughly close to the Fed's target. Still, the Fed began to hike its own benchmark rate to keep inflation low at the central bank's own 2% target. Trump repeatedly criticized the Fed because he wanted to juice growth despite the risks of higher prices.
Then the pandemic hit.
Inflation sank and the Fed slashed rates to sustain the economy during lockdowns.
When Trump celebrates historically low mortgage rates, he's doing so because the economy was weakened by the pandemic. Similarly, gasoline prices fell below an average of $2 a gallon because no one was driving in April 2020 as the pandemic spread.
The United States lost 2.7 million jobs during Trump's presidency, according to the Bureau of Labor Statistics. If the pandemic months are excluded, he added 6.7 million jobs.
By contrast, 15.4 million jobs were added during Biden's presidency. That's 5.1 million more jobs than what the CBO forecasted he would add before his coronavirus relief and other policies became law — a sign of how much he boosted the labor market.
Both candidates have repeatedly promised to bring back factory jobs. Between 2017 and the middle of 2019, Trump added 461,000 manufacturing jobs. But the gains began to stall and then turned into layoffs during the pandemic, with the Republican posting a loss of 178,000 jobs.
So far, the U.S. economy has added 773,000 manufacturing jobs during Biden's presidency.