Posted on Monday, December 16, 2024

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by Andrew Shirley

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When President-elect Donald Trump takes over for Joe Biden next month, he will be inheriting an economy teetering on the brink of disaster. But as hazardous as the situation is, Trump may be the man best suited to defuse the ticking economic time bomb Biden is leaving behind.

While the economic situation under Biden remains far worse than the boom times of the Trump years, things have improved marginally from the worst of the inflation crisis in 2021 and 2022. Prices are still more than 20 percent higher than when Biden took office, but the monthly inflation rate has eased from the astronomical 9.1 percent seen two years ago. The stock market has also had relatively robust returns, and job numbers overall have been strong this year – although there remains ample reason to doubt the government’s official narrative on that front.

However, there are concerning signs that the slow improvement over the past few months may be short-lived. The Consumer Price Index, the measure used to gauge inflation, was 2.7 percent in November, slightly above the 2.6 percent rise in October, and could be set to get worse in the months ahead.

Government spending – the major driver of inflation – has also only continued to accelerate under Biden. Even if Trump cuts spending shortly after taking office, the dollars flowing out of the Treasury right now could have a residual effect on inflation months from now.

Inflation aside, Trump will have a number of other urgent economic fires to put out when he takes office. According to the Department of Labor, 242,000 people filed for unemployment in the first week of December, up from 225,000 the previous week. At a time when claims should be dropping significantly due to a holiday hiring surge, this rise is concerning.

Trump will also be facing a spiraling debt crisis thanks to record peacetime spending under Joe Biden. The country is expected to run a staggering $1.8 trillion deficit this year, and Biden will have added more than $7 trillion to the national debt – which now stands at over $36 trillion – by the time he leaves office. The House Budget Committee predicts that interest payments on that debt alone will total $12.9 trillion over the next decade.

As economists from both sides of the aisle warned during a recent hearing in the House, if the government fails to curb rising debts and deficits, it could shake investor confidence in the government’s ability to service its debt – likely spiraling into a full-blown financial crisis.

Americans are also facing a debt crisis on the individual level. In part due to Biden’s inflation eating into paychecks and budgets, the total amount of credit card debt held by Americans has now surpassed $1.14 trillion. Serious payment delinquencies are on the rise, and about 20 percent of credit card users are maxed out.

In July, the Bureau of Economic Analysis also revealed that the personal savings rate had fallen to its lowest level since November 2022. During Trump’s pre-COVID economy, Americans saved an average of 7.4 percent of their income. Under Biden, those rates have slipped by over half, decreasing to 3.4 percent.

All of these factors point to an economy heading toward dire straits – and the American people clearly understood those stakes in November’s election. Exit polls showed that the economy was by far the top concern for voters and that they trusted Trump more than Harris on the issue.

There are, accordingly, high expectations for the president-elect when it comes to righting the economic ship. However, Trump appears to have understood the magnitude of the task from early in his campaign and has already set plans in motion to bring inflation and the debt crisis under control.

Perhaps his most innovative move was establishing the Department of Government Efficiency (DOGE), headed by Elon Musk and Vivek Ramaswamy. The new agency is tasked with eliminating wasteful spending government-wide – with a promise to conclude its work by July 4, 2026. Musk has said he believes DOGE could make recommendations that would cut spending by as much as $2 trillion.

Trump has also made clear that he believes creating an “American energy revolution” will be key to bringing down prices, ending the inflation crisis, and accelerating economic growth. As Trump said in an interview with financial expert Dave Ramsey, “If you get the energy down, other things will follow…I believe I’ll be able to get energy down to 50 percent of what it is now in less than a year.”

Trump’s stated goal is to ensure the United States has “the number one lowest cost of energy of any industrial country anywhere on Earth,” achieved through ending the Biden administration’s delays on drilling permits and leases and boosting oil and gas production.

Perhaps no president in history inherited as difficult an economic situation as the one Trump will inherit on January 20. But all indications suggest Trump is nonetheless the best hope for turning a disaster into a triumph.

Andrew Shirley is a veteran speechwriter and AMAC Newsline columnist. His commentary can be found on X at @AA_Shirley.