[When President Barack Obama took the oath of office in January 2009, unemployment was surging, markets were plunging, and families were losing their homes. He inherited an economic calamity. On the other hand, President Donald Trump has been dealt a far stronger hand, with an unemployment rate of just 4.1% as he returns to the White House, vowing to dramatically reshape the American economy through a flurry of executive action and sweeping legislation.
The US economy is broadly in good shape, with the jobs market enjoying a historic period of uninterrupted growth, wage increases beating price gains, and overall growth continuing to defy expectations. “The president is inheriting a very healthy economy,” said David Kelly, chief global strategist at JPMorgan Asset Management.
However, the cost of living remains a major frustration, and there are risks of reigniting inflation. “Uncertainty is a tax on the economy,” said JPMorgan’s Kelly. “In football, you may want to keep your opponent in the dark. But if you’re managing an economy, you want to make your plans clear. If you don’t, people may wait to make decisions, and that tends to slow the economy down.”
Trump’s trade agenda has thrown a wrench into the equation, with uncertainties surrounding massive tariffs, the impact of which could be significant. Trump has promised to impose massive tariffs on allies and rivals but has yet to outline his strategy.
The biggest frustration for many Americans is the level of prices, with the typical US household spending $1,213 more in 2024 than in 2021. Paychecks, on average, are up by a bit more, but many people are still struggling to make ends meet. Trump has vowed to get prices to drop, but many economists doubt this will happen, as it would require a significant economic downturn or even a depression.
As the economy enters 2025, concerns about inflation and growth remain. The inflation rate has tumbled but remains above the Federal Reserve’s target, and markets have been driven by a rush into Big Tech and artificial intelligence stocks. “The bottom line is that the US economy is entering 2025 on a firm footing,” said Torsten Slok, chief economist at Apollo Global Management. “We continue to worry more about upside risks to growth and inflation.” Ultimately, Trump’s economic success may not hinge on price drops, but rather on a continued trend of real wage growth, which would allow more Americans to catch up with the higher level of prices and feel better about the cost of living.
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