The two preceding presidential terms were characterized to a large measure by economic cycles, contingent on domestic strategies and policies, the forces of the market and global disturbances and occurrences not anticipated in advance. Donald Trump (2017-2021) and Joe Biden (2021- present) have focused on different strategies of economic policy, the main factors that can be distinguished here are changes to taxation and Tariffs, the global pandemic, and an ever-changing trade market. This paper also seeks to analyze the performance of the U.S. economy in these two presidential terms in terms of growth rate, employment, inflation, and federal spending.
Donald Trump officially became the president in January 2017, and to his credit, he came into the presidency with Obama’s quite healthy economy. The United States was still in a recovery process from the post-2008 Great Recession and Trump’s presidency propped a faster economic growth due to taxes and deregulations.
One of Trump’s significant focuses was the TCJA also known as the Tax Reform Bill enacted in December 2017. The TCJA capped the corporate income tax rate at 21% from a previous rate of 35% thus; it was widely believed that this would encourage investment, job creation, and increase wages. The law also allocated individual tax reductions, however, these were only to be for a limited period and these seemed mainly to favor the well-off. Corporate income tax cuts, on the other hand, were more lasting in nature.
Despite having led to the improvement of economic development and attracting investment, the critics opined that the law only served to enhance the current divide between the rich and the poor and the corporations. In addition, the growth of business investment did not rise to the expectations made regarding the levels that would be attained. By mid-2018, the economy was rebounding at an improved rate of 2. Nine percent increase in the GDP, but this was only seen in the growth and not in the real sense.
The staff of Trump also sought to exert considerable pressure on deregulation, especially in the energy and finance sectors, to ease the burden on the enterprises. There was also a lessening of environmental standards while attempts were being made to streamline procedures on this aspect of infrastructure development. While these steps were welcomed by entrepreneurs and industrialists, ecological and workers’ organizations responded with the detrimental effects in the long run on the population’s health and lives.
The other defining feature of Trump’s presidency was his trade war with China. Gaining popularity amid the American citizens’ quest to close the U. S. trade deficit and revive manufacturing industries, Trump levied tariffs on Chinese imports worth hundreds of billions of dollars. China did not take kindly to the tariffs which affected some of its key exports by imposing its own tariffs on imports from the United States, particularly agricultural produce.
So while there were some apparent short-term gains for industries such as the steel industry, the overall dimension of the effects on the economy is somewhat negative. China's production cost went high and many companies that depended on its products faced an increase in cost; farmers were most affected by these tariffs. While the administration showered billions of dollars on farmers, the trade war brought volatility in global markets and disruption of the supply chain.
The U. S economy was also looking good and was in good health before the arrival of the COVID-19 pandemic. It got to its lowest in 50 years with an unemployment rate of 3%. Which was 5% in February 2020 and also the stock market which touched new records. The economic recovery continued, which had started during Obama’s tenure, although wage increases were low for many people.
Overall the growth rate of the economy during Trump’s presidency was moderate and never on the higher side, averaging around 2. 5%. The policies of tax reductions and business deregulation seemed to improve the situation for the short period, however, the effects on inequality and fiscal balances were a cause for concern in the long term in this method. As a result of the tax cuts, the federal budget deficit was realized along with a rise in the national debt.
When COVID-19 hit at the beginning of 2020, this became a black swan event for the economy of the United States. The Trump administration received much backlash for the manifest policy response during the early stages of the virus spread, including the lack of seriousness in the early health advisories.
As of March 2020, the US was in the weakest economic situation that it had ever seen even since the great depression. The economy shrunk 31 % in FY 2015 and its deficit is also a technical deficit which comes out to be 15 % of GDP. Meanwhile, GDP growth declined to 4% in the second quarter of 2020, and unemployment rose to almost 15% of the populace due to the shutdown of numerous companies and the furlough or layoffs of millions of workers. In the same year the share market suffered a downfall, though not a significant one, it was on the rise again later in the year.
As a result, Congress has enacted several relief packages including the CARES Act which included a direct payment of checks to Americans, an extension of unemployment benefits, and a provision of loans to small businesses. The Federal Reserve also significantly lowered the interest rates and adopted measures that were virtually seen to support financial markets.
By the end of 2020 however, the economy showed indications of the start of the recovery phase albeit at a rather slow pace and also with inequality in wealth retrieval whereby lower income earners and the people of color bore the brunt in the loss of their jobs. The pandemic exposed systematic problems in American society such as the loopholes in the access to healthcare, wage inequality, and the precariously covered essential workers.
Joe Biden went to the Oval Office in January 2021 and he found the economy in a bad state as it struggled to recover from the pandemic. His administration sought ambitious actions on a quick pandemic restoration and the economy boost by massive monetary stimulus, infrastructure construction, and climate change measures.
President Biden’s first signed law was the American Rescue Plan Act enacted in March 2021. The $1. The Covid relief bill which was worth a 1.9 billion stimulus package planned another round of us direct payments to Americans, extended unemployment benefits, increased child tax credit, and for COVID-19 testing, vaccination, and reopened schools.
The ARP was rightly hailed for boosting the economic growth in 2021. The expansion of Gross Domestic Product also recorded impressive improvement by achieving a growth rate of 5 percent. 2021 The employment rate has extended to 70 percent, and we rejoiced at the improvement, this is the highest rate we have seen in several decades, and the unemployment rate dropped to 4 percent. Of such bookings, 2% must be made by December of that year. It also helped in the reduction of poverty levels as evidenced by the child tax credit which impacted many children by heaving them out of the vice.
However, critics noted that the ARP led to an increase in inflation as they stated that continued scarcity in some supply lines while implementing the measures boosted the circulation of cash in the economy and, hence may fuel inflation. Inflation stood at 7% in December 2021, the highest level recorded in 40 years thus casting doubts about the sustainability of the current recovery.
In the middle of the year 2022, inflation had then emerged as a major economic problem. Because inflation was already in the categories of food and energy, wages failed to stretch as far as they used to due to escalating prices of goods. There are many reasons, such as COVID-19, problems with supply, and demand due to shortages of workers, and so on, and the measures taken to stimulate the economy.
As a result, the Federal Reserve started increasing the interest rates with the aim of taming down inflation. Increasing rates have been applied by the end of 2022 with even more consecutive hikes expected during 2023. The decisions to tighten the monetary policy made people worry whether the country was heading toward a slowdown of growth, or even a contraction as high interest rates and costs of credit are known to reduce spending by consumers and businesses.
It is considered that the most significant accomplishment of Biden was the approval of the Infrastructure Investment and Jobs Act in November 2021. The $1. The $1.9 trillion bipartisan bill provided $27 billion for rebuilding roadways and bridges, $66 billion for overhauling railways, $40 billion for installing new broadband networks, and $100 billion for updating the nation’s electric grid and boosting clean energy projects.
Climate change mitigation also emerged as a key policy area in Biden’s administration, especially when it came to economic plans. President Biden rejoined the Paris Agreement on climate and has set quite an ambitious agenda on the stage to utilize clean energy only for the nation and aim for zero-emission America by mid-century. Cleantech frameworks such as renewable power, green vehicles, and efficient technologies were part of Biden’s extensive agenda on the economy at large.
Such measures were welcomed by environmental activists, however, the shift to a green economy was met with some opposition from such industries as the producers of fossil fuels. Switching to renewable energy also created fears of loss of jobs in energy-related industries but the administration reassured that the affected industries would be trained to work in green energy industries.
Another strand of the overall Biden economy can be defined with the changes in the labor market. The pandemic boosted such tendencies in America’s working population as teleworking, and many employees reconsidering the role of work in their lives.
By 2022, the U. S. was what some described as the “Great Resignation,” where millions of people quit their jobs to find better wages, safer working conditions, and flexible schedules. It is a well-understood fact that in stiff competition it is the worker who enjoys better bargaining power and thus the wages went up particularly those of the lower-paid employees.
Biden’s administration adopted labor rights affirming an increase in wages and better protection for the workers. Several states currently have further legislations which seek to increase federal minimum wages to $15 an hour but this is yet to be implemented at the federal level by the president. Also, Biden has praised the unions and given support to the workers’ right to organize.
This paper aims at identifying different challenges as Biden’s term advances the United States economy. Inflation is still present as a problem and the measures taken by the Federal Reserve to address it may reduce rates of expansion in the following years. Conditions in the global economy are also volatile evidenced by the disruption of the supply chain and the possibility of trade and investment being influenced by political instabilities.
Besides, the national debt is another issue a permanent challenge for the country, which significantly increased during the pandemic due to new government spending. Increased spending with both the Trump and Biden administrations is responsible for reaching the set record for federal debt, and ensuring that fiscal sustainability does not harm the ability of the economy to rebound is now a task that will fall to future presidents.
However, the growth of the U. S. Economy has been robust, the country bouncing back from the COVID-19-induced recession than many thought possible. In many ways, the Biden administration has promised to create a new form of economic model with a focus on infrastructure, climate change, and labor rights but the path to these goals is not easy.
The economic landscape of the U. S. over the last two presidential terms includes several policy shifts, international shocks, and for the first time in the country’s history, the COVID-19 pandemic. While Trump was known for advocating for lower taxes, less regulation, and trade wars, Biden centered around stimulus, infrastructure, and climate reform. The labor market, inflation rate, and general fiscal policies have posed individual and different tests to both administrations and the future path of the country is still in a quandary.
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