Posted on Wednesday, March 19, 2025

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by Andrew Shirley

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President Donald Trump’s economic agenda just got a ringing endorsement from America’s second-largest consumer bank.

A recent report from Bank of America underscores the shocking extent to which the Biden economy was built on government spending while also emphasizing the necessity of Trump’s reforms. The report does acknowledge that Trump’s policies, including a significant reduction of government expenditures, may lead to some short-term economic pain, but nonetheless concludes that these policies are necessary for the long-term vitality of the U.S. economy.

Data in the report reveals that “one year ago, 85 percent of U.S. job market growth was in government and sectors dependent on government spending like health and education.” That number now remains alarmingly high at 70 percent, but the fact that it is falling “should raise productivity.”

In other words, the vast majority of the “job growth” touted by the Biden administration was entirely manufactured by deficit spending that sent inflation soaring to levels not seen in 40 years.

Moreover, last year “one-third of [U.S.] GDP came from [local, state and federal] government spending, a record high excluding periods of war or crisis… this was financed by 6-7 percent budget deficits, another unwelcome peacetime record.” Yet more evidence that the Biden economy – which the media and elected Democrats all insisted was quite strong – was in reality propped up by unsustainable government spending.

In short, Biden left a giant mess for the Trump administration to clean up. But the good news is that, as the report outlines, the administration has forwarded a bold plan to do so.

According to Jared Woodard, head of the Research Investment Committee at Bank of America and author of the report, a “handoff from big government to the free market” like Trump administration is leading “may prove slippery” but “seems necessary given large deficits and bloated debt burdens.”

“It may take time for private sector job growth to accelerate, for government workers to resettle, for broad-based corporate profits to rise, and for global trade to find a new equilibrium,” Woodard continued. “In our view, the likely productivity gains from a market-based economic reboot are greater than risks; and the risks from the unsustainable status quo of debt-financed, tepid, and narrow economic growth are severe.”

The report refers to this initial period of turbulence – perhaps reflected in the rocky start to the year for the stock market – as a necessary “detox” from runaway government spending. Given just how much the economy has relied on federal dollars in recent years, this detox won’t be easy.

From 2019 to January 1st, 2025, the federal government spent roughly $6.5 trillion on just the response to COVID-19, exploding the deficit by nearly $1 trillion. In that same period, the national debt increased by about 53 percent to nearly $36 trillion. Put another way, nearly 35 percent of all the debt incurred over the nation’s 249-year history has been added in the past five years.

Of course, much of that funding was necessary to keep the economy afloat through the early days of the pandemic. But by the time Biden signed the $1.9 trillion so-called “American Rescue Plan” in 2021, the pandemic had largely subsided and that enormous sum became little more than a left-wing slush fund.

Despite the magnitude of the challenge that the Trump administration faces, there are some positive early signs. The most recent jobs report revealed that the country had added 10,000 manufacturing jobs during Trump’s first full month in office, a significant reversal from an average of 9,000 lost every month under the Biden administration. Additionally, 93 percent of new jobs added in February were in the private sector, another dramatic shift from the data outlined in the Bank of America report.

February inflation data also showed a 2.8 percent increase in prices, beating expectations. According to Truflation, a blockchain-based provider of real-time economic data, inflation has slowed to around 1.3 percent this month. While official numbers won’t be out until April, 1.3 percent would be the lowest inflation number since December 2020. The core inflation rate, which excludes volatile prices such as those for food and energy, has already hit a four-year low since Trump took office.

Years of reckless government spending under Biden created an artificial sense of prosperity that was never sustainable. Now, as the Trump administration works to restore balance, the temporary market volatility reflects the economy’s transition from government dependence to private-sector-driven growth.

But some short-term pain – perhaps already subsiding – is a small price to pay for long-term stability, lower inflation, and real job creation. As the Bank of America report notes, a market-based economy will ultimately yield greater productivity and stronger growth. Trump’s reforms are the only viable path forward to ensure a thriving economy built on real, sustainable prosperity, rather than endless government intervention.

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