A tame inflation report this week gave hope to Democrats that their biggest electoral weakness may finally be in the rearview mirror after being stubbornly persistent since 2022.
Even as inflation has been slowing since then, it’s still a big worry for voters, and in his bid to get reelected, former President Donald Trump has been hammering Democrats on the issue constantly. His press conference Thursday was called to highlight price increases on a variety of consumer staples.
And Trump has continued to tout the economy during his own tenure as president: On Thursday, he called the pre-COVID economy “the best our country would ever do.”
While inflation did hit a four-decade high in 2022, by a wide variety of measures — job growth, wages even adjusting for inflation, the pace at which entrepreneurs start small businesses — the post-pandemic economy beats the pre-COVID economy handily.
The Trump campaign did not respond to a request for comment on the subject.
Zach Moller, economic program director at center-left think tank Third Way, said many people don’t feel that the current economy is better, no matter what the numbers actually say, because they’re still processing what happened during the pandemic.
“COVID changed the world, and people have a bit of nostalgia for how the world was before, before COVID changed so many things about our lives,” he said. “And that’s a very powerful thing.”
Some of it may have to do with how hard it is to compare the pre- and post-pandemic economies because of shifts that happened in reaction to the pandemic.
For example, Bobby Kogan, senior director of budget policy at the liberal Center for American Progress, said the amount of money consumers spent on dining out, generally seen as a luxury expense, is higher now than before COVID. Going out to eat may mean less disposable income for other things.
Kogan said that even adjusted for inflation, people are eating outside the home more than they did before the pandemic. That would not be happening if real incomes were as squeezed as critics of the economy say, he said.
Other indicators seem to bear out the notion that the economy has improved.
1. How Many Jobs Have Been Created
The number of workers on private sector and government payrolls, as compiled by the Labor Department in its monthly jobs report, grew by 225,522 on average from October 2022 through July 2023, according to HuffPost calculations. In the pre-pandemic era, from February 2017 through February 2020, average monthly job growth was 180,351.
While the COVID recession officially lasted only two months, according to the group that formally dates business cycles, there is no official date by which the economy returned to so-called normal. But the number of employed Americans returned to its pre-pandemic level in September 2022.
2. Who Is Working
Not only has the number of jobs created monthly been higher, but a key measure of who is working has also improved since the pandemic. The so-called “prime age” employment to population ratio, the proportion of workers between 25 and 54 with jobs, has hit 80.9% twice since the pandemic, most recently in July. Under Trump, it peaked at 80.6% in January 2020.
The last time the measure was higher than July’s reading was in March 2001.
Focusing on the 25 to 54 age range gets rid of distortions due to phase-of-life discrepancies, like college attendance or retirement.
“The whole point here is you’re trying to focus on working-age people and say what’s going on, what’s the trend with working-age people,” said Kogan.
3. How Much Workers Are Earning
On wages, median weekly earnings are higher than before the pandemic, even after adjusting for inflation.
According to the Labor Department, after earnings (measured in 1983 dollars) bounced up during the pandemic because lower-wage workers were more likely to be sent home, median real earnings dipped and then peaked post-pandemic at $371 in the fourth quarter of 2023. Before the pandemic, in the first quarter of 2020, the measure peaked at $367. In the most recent reading in the second quarter of 2024, it was slightly higher, at $368.
“It means that people have more money after you account for all of their expenses and increased costs in their expenses,” Kogan said.
“It’s true prices have gone up, but people’s incomes have gone up more.”
More impressively, Kogan said, is that the gains have been widely shared, with low-wage workers making the biggest gains.
“Even after accounting for inflation, the median worker’s earning more than they were in 2017, 2018, 2019,” Moller said.
4. More Small Businesses Are Getting Started
One indirect measure of optimism has been consistently higher under Biden and than Trump: people’s willingness to start new small businesses.
As measured by the U.S. Census Bureau, monthly small business formation under Trump before the pandemic peaked in December 2019, with 314,337 new business applications.
But small business formation has remained well above the pre-pandemic peak, even after September 2022, when overall employment was back to its pre-COVID level.
Small business formation peaked at 475,689 new business applications under Biden in July 2023, and in July of this year, it was still at 420,802.
“Forty-nine of the 50 states today have more businesses than at any time under Donald Trump,” Moller said, though he attributed the change less to specific policies than to the lingering effects of COVID.
Small business formation spiked during the initial stages of the pandemic, as many temporarily laid-off workers looked for other ways to earn cash, before the figure almost as quickly dropped. Since then, it has settled at a higher rate, possibly permanently. Prior to the pandemic, the number of new small business applications had only been above 300,000 twice, in 2019. Since January 2021, it has not fallen below 400,000.
Moller attributes this to a mindshift post-pandemic. “If I can start my own business, maybe work from home for a part of it, there’s a lot of different opportunities for things there,” he said.
5. Trade Deficit With China Smaller
And on one of Trump’s signature issues, trade with China, the post-pandemic U.S. economy has also favored Biden. The average annual China trade deficit, the difference in goods and services the U.S. buys from China compared to what it sells there, has been smaller under Biden than under Trump.
From 2017 through 2019, leaving out 2020 as a pandemic year, the deficit averaged $338.7 billion. But for the period of 2021 through 2023, the annual gap dropped to an average of $317.5 billion, with 2023 posting the smallest gap since 2009.
Usually, the trade gap grows when the U.S. economy is growing, as imports grow to meet demand. But the declining trade deficit with China may reflect companies shifting their production out of the country after the supply chain woes during COVID.
Despite the numbers, though, Moller and Kogan both said inflation bears some blame for voters’ dour view of the economy. A recent Economist/YouGov poll found inflation remained the top issue for voters, followed by jobs and the economy overall. And 52% of respondents disapproved of Biden’s handling of the economy.
But other factors are also at play, they said.
Kogan said even if the average worker is better off, that still means some are worse off. Another factor, he said, may be a side effect of lower-income workers seeing the biggest economic gains in the post-pandemic recovery.
“All the income groups [are] better off, but the people who [are] the least better off are the professional, managerial class,” he said.
Moller said fairly low inflation for many years meant the 2022-2023 flare-up was an ugly surprise as many people experienced it for the first time. But he also came back to the mental reset COVID brought about, noting that Harris’ polling on the economy has been better than Biden’s.
“I think we’re processing it now, and I think this is why the vice president’s getting some better polling right now on the economy. People are starting to reset to this new normal,” he said.