Inflation turned out to be the surprise villain of Joe Biden’s four-year presidency. It arrived with little warning in 2021, hit a 40-year high in 2022, and undoubtedly contributed to Vice President Kamala Harris’s loss in the 2024 presidential election.
Yet the US economy survived inflation better than many economists expected. Aggressive rate hikes by the Federal Reserve helped bring inflation down rapidly from 2022 to 2024 without the recession that dramatic monetary tightening often causes. As Biden leaves office, the economy appears to have nailed a “soft landing,” in which growth and employment held up while inflation cooled.
Many Americans nonetheless gripe that the cost of essential items went up and stayed up, causing lasting harm to their purchasing power. Are they right? We ran the numbers to settle the question.
Overall inflation was 21.2% during the four years Biden was in office, with the latest data from December 2024. Earnings rose by 19.4% during that time. So the typical family did, in fact, fall behind during Biden’s presidency. Prices rose by more than earnings, which means a typical paycheck bought less at the end than it did at the beginning.
In terms of buying power, inflation split Biden’s presidency into a wipeout phase and a recovery phase, as the chart above shows. From April 2021 through May 2023, real earnings were negative, which means incomes were growing by less than inflation. Real earnings turned positive in June 2023 and have stayed that way. But the recovery came too late for Biden and his fellow Democrats. Exit polls from the 2024 election clearly showed voters continued to feel stung by inflation and blamed Biden and, by extension, Harris.
Voters trusted Donald Trump more on inflation, and the data backs them up. During Trump’s first presidential term, earnings rose by less than under Biden, but inflation was far lower, so the typical family got ahead. Inflation rose 7.9% during Trump’s four years, while earnings grew by 15.4%. Voters didn’t like Trump’s handling of COVID in 2020, one of the big reasons they replaced him with Biden. But inflation was benign.
During Biden’s presidency, Yahoo Finance tracked inflation in 26 categories that account for most of the things people spend money on. In 12 of those categories, prices rose by more than incomes during Biden’s four years overall. That included housing, transportation, and food, the three things the typical family spends the most on. During Trump’s four years, earnings rose by more than prices in every single one of those 26 categories.
To some extent, Biden couldn’t catch a break. Many factors contributed to “Bidenflation,” including shortages caused by COVID-era supply chain disruptions, massive shifts in spending patterns during and after COVID, huge amounts of government stimulus in 2020 and 2021, and Russia’s 2022 invasion of Ukraine. The only part of that Biden had any control over was the 2021 American Rescue Plan, and that entailed just one-third of all the stimulus Congress enacted in 2020 and 2021. Yet voters squarely blamed Biden for rising prices, simply because he was the guy in charge when prices began marching upward.
President Joe Biden waits to speak about foreign policy at the State Department in Washington, Monday, Jan. 13, 2025. (AP Photo/Susan Walsh) ·ASSOCIATED PRESS
One form of sticker shock seemed to follow another as Biden tried, and largely failed, to assure Americans he was on top of the problem. As food inflation was approaching double digits in early 2022, Russia invaded Ukraine and oil prices soared, pushing US gasoline prices to $5 per gallon, the highest level ever. The spike in energy costs pushed the price of food and other goods even higher, since fuel is necessary for production and transportation.
While it was getting more expensive to drive a car, it was getting more expensive to buy one too. A severe shortage of components for new automobiles drove new car prices up by 10% and used cars up by 13% in 2022. In January 2022, the 12-month inflation rate for used cars was an astonishing 41%.
A nationwide housing shortage has been building for years, due largely to state and local regulations that make it hard to build homes in areas where people want to live. That collided with COVID-era shortages of lumber and building materials to push housing costs up 7.2% in 2022, 6.4% in 2023, and 4.4% in 2024. Rents rose by like amounts. Then came a surge in auto insurance premiums due to rising car prices, costlier maintenance, and more natural disasters wrecking vehicles. The cost of car insurance rose by 17.4% in 2023 and another 17.8% in 2024.
Trump shouldn’t feel cocky. His first presidential term was likely the last of a low-inflation era that ran from 1990 to 2020. Trump benefited from an energy boom driven by new fracking technology in which drillers were competing for market share at the expense of profitability. That kept gasoline prices low but led to an industry bloodbath in 2020, a searing experience energy firms vow not to repeat.
Trade barriers are going up as Trump and other leaders shun cheap foreign products and try to rebuild once-proud domestic industries, which can only push prices higher. The massive national debt may also necessitate a less generous federal government that provides fewer benefits and requires more taxation. And climate change seems certain to generate worsening disasters that make insurance and other living costs ever more expensive. Biden's experience might be a warning for future presidents.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman.
