Jamie Spencer
A Resilient Economy, But Structural Challenges Remain
As Donald Trump reclaims the presidency, he inherits an economy that has grown consistently since he left office in early 2021. However, rising inflation, federal deficits, and trade tensions present significant challenges.
Key Economic Indicators
- GDP Growth: The U.S. economy has expanded by at least 2.5% annually since 2021.
- Unemployment Rate: At 4.1%, well below the historical norm of 5.5%.
- Stock Market Surge: The S&P 500 has gained 57.9% since Trump last held office.
- Federal Debt: Now at $28.8 trillion, a 33.3% increase from 2021.
- Inflation Rate: Down from a 9.1% peak in 2022 but rising again, reaching 2.9% in December.
Mark Zandi, chief economist at Moody’s Analytics:
“Success for the Trump administration would be to do no harm to the exceptionally performing economy it is inheriting.”
Labor Market: Job Growth Continues
- 16.6 million more jobs exist today than when Trump left office.
- The unemployment rate remains low at 4.1%.
- Job openings exceed job seekers, signaling a tight labor market.
However, the Bureau of Labor Statistics (BLS) will adjust 2024 employment figures in February, which could lower job totals.
Inflation and Wages: A Mixed Picture
- Consumer Price Index (CPI): Inflation peaked at 9.1% in June 2022 but has cooled to 2.9% in December 2024.
- Wages: Inflation-adjusted wages remain 4.4% below their peak in May 2020.
Trade Deficit and Tariff Threats
- The U.S. trade deficit remains high, at $878.8 billion over the past 12 months.
- Trump has vowed to impose broad new tariffs, which could disrupt global supply chains.
Oil Production at Record Levels
- U.S. crude oil production hit 13.2 million barrels per day in 2024, setting new records.
- Trump claims he will “cut energy prices in half”, but experts argue global supply and demand dictate oil prices.
Immigration: A Key Policy Battle
- Illegal border crossings have dropped in recent months but remain a contentious issue.
- The asylum backlog has exceeded 1 million cases.
- Trump has promised the largest deportation program in U.S. history.
Crime Rates Have Declined
- Violent crime fell 4.3% since 2020, contradicting Trump’s campaign rhetoric.
- Murder rates have dropped by 14.5% compared to Trump’s last year in office.
Healthcare and Insurance Coverage
- The uninsured rate has dropped from 9.7% in 2020 to 7.6% in 2023.
- Affordable Care Act (ACA) enrollment hit a record 24.2 million in 2025.
- Trump has not proposed an alternative to the ACA but has hinted at changes.
Federal Debt and Deficit: A Mounting Crisis
- The U.S. deficit exceeded $1.8 trillion in 2024.
- Trump’s tax cut plans could add $8 trillion to $10 trillion to the national debt over the next decade.
Outlook for Trump’s Second Term
While Trump inherits a strong economy, key risks include:
- Tariff wars and trade tensions.
- Rising inflationary pressures.
- Record-high federal deficits.
- Potential economic uncertainty tied to immigration and tax policy changes.
As Trump prepares to govern again, his economic policies will be closely scrutinized, especially as the Federal Reserve, Wall Street, and global markets adjust to his return.
