Filenews 19 December 2025
By Gene Sperling*
President Donald Trump travelled to Pennsylvania last week to reiterate his messages on the economy: Americans' concerns about the cost of living are a Democrats' "lie" and if someone is unhappy, Biden's Economy is to blame.
However, the problem is probably the fact that Trump's Economy is "self-injured".
It is not uncommon for presidents who begin their term to attribute financial problems to their predecessors. Pass. But Trump's move to put the blame on Joe Biden is not just a minor distortion of reality: it is an attempt to completely mislead Americans about the economy his administration inherited and the damage his policies have caused.
Let's take a look at the facts. It is true that global inflation in the post-Covid period, especially in 2022, drove the prices of many basic goods, such as food, to significantly higher levels than the prices that Americans remembered before the pandemic. In the Biden White House, we learned in a painful way that even strong employment growth, low unemployment and moderating inflation have not been able to ease voters' frustration with the price level of basic items.
But did the Trump administration inherit a weak economy with uncontrolled inflation, from which it is now trying to get the country out? Not at all.
When Trump took office, unemployment hovered around 4%, after a long period of below 4%. Under Trump's presidency, according to the November employment report released Tuesday, the unemployment rate now stands at 4.6 percent — a four-year high, with unemployment for the black community having risen by more than a third, from 6.2 percent to 8.3 percent.
Following the historic increase in employment under Biden during the first years of his term, the upward trajectory in 2024 has remained steady – averaging around 100,000 new jobs per month – taking into account projected revisions. Today, under the Trump presidency, excluding the health care and social welfare sector, the economy has lost 182,000 jobs in the seven months since the Liberation Day tariffs were announced in April. Worse still, at a recent news conference, Federal Reserve Chairman Jerome Powell estimated that, with revised metrics, the economy has lost 20,000 jobs every month since April.
And the consumer confidence index? It has fallen by 26% since Biden left office. The sub-index for current economic conditions has not only fallen by 32% since Biden left the White House, but has reached new all-time lows in the last two months, at 48 years of the index. Yes, it is worse than the period of the pandemic and the Great Recession of 2008-09. When Trump was elected, Americans were predicting inflation of 2.6% for next year. Now, inflation expectations are at 4.1%.
Indeed, after the election, inflation had fallen significantly, and leading independent experts predicted that it would continue to decline until the end of 2025 to levels very close to the Fed's target (2%), according to the Personal Consumption Expenditures (PCE) price index. In the second half of 2024, the core PCE was just at 2.5%. At the time Trump was preparing to return to the White House, Goldman Sachs predicted that the core PCE would fall to 2.1% by the end of the year, while the IMF predicted that inflation would subside, "close" to 2%.
The reality is that Trump inherited an economy that was on course for what he might call a "big, beautiful" soft landing.
However, Trump's own erratic, far-reaching, and often generalized tariff hikes have reversed that momentum. Core PCE has been running again at 2.8% since April. And the consumer price index (CPI), the other commonly tracked index, fell significantly in the early months of Trump's tenure, before Liberation Day policies, but its aggregate and core ratios have risen year-over-year by 3.6% over the past three months, defying predictions by Trump officials that things would improve as his term progressed.
A scientific report documents that without Trump's policies, the consumer price index would have been at 2.2% in August, as opposed to 2.9% in the month.
Trump's other policies can also reverse the downward spiral of inflation he inherited. Electricity prices rose 4.3% in just eight months as Trump scrapped investment in clean energy and imposed tariffs on energy imports needed to expand grid capacity, amid growing demand from AI data centers.
Both Bank of America and Moody's fear that Trump's crackdown on immigration will trigger further upward price pressures in sectors that employ immigrants. In addition, the Republican-led government and Congress want to double the cost of health insurance for more than 22 million Americans, allowing for the elimination of insurance program subsidies starting in 2021. Trump's approach will further increase the cost of health care, create higher-risk groups, and lead to an expansion of uncovered care through massive cuts to Medicaid.
While Trump's second term happily coincided with a dramatic increase in private investment in AI, the economic weakness is clearly attributed to the president's policies. The White House economic staff has also acknowledged it, at least in part, claiming that it will improve "affordability" by reversing its own tariffs on products such as coffee and bananas, which are nearly impossible to grow in the US.
Last week, Powell attributed the rise in inflation to Trump's tariffs, and many economists believe that part of the weakening labour market is due to the fact that companies have been facing higher costs since Liberation Day. With many of them expressing the need to drive up prices further in 2026, the best hope for further progress in addressing the rising cost of living may be the Supreme Court overturning more of Trump's policies, ruling the use of the International Economic Emergency Powers Act illegal. These moves do not cure the problem, but at least they offer a "bandage" to an economy that has been self-injured.
Gene Sperling was director of the U.S. National Economic Council under Presidents Bill Clinton and Barack Obama and was a senior adviser to President Joe Biden.
Adaptation – Editing: Lydia Roubopoulou
