July 19, 2024

Biden vs. Trump: Which Presidency Holds Greater Inflation Risk?

The average inflation rate during Donald Trump’s presidency was 1.9%. In contrast, inflation under Joe Biden has averaged 5.4%, leading many voters to associate Biden with inflation. However, some prominent investors, including those at Goldman Sachs, argue that inflation could worsen if Trump wins the 2024 election.

In a recent analysis, Goldman Sachs recommended buying gold as a hedge against the inflationary risks associated with Trump’s potential economic policies. “We see value in long gold positions as an inflation hedge from geopolitical shock including tariffs, Fed subordination risk, and debt fears,” the analysts noted. While they didn’t directly attribute these risks to Trump, the references clearly align with his proposed economic strategies.

Trump’s plans include imposing a 60% tariff on all imports from China and a 10% tariff on other imports. According to the Peterson Institute for International Economics, such tariffs would increase a typical American family’s costs by $1,700 annually, essentially fueling inflation by making everyday goods more expensive.

Another point of concern is Trump’s desire to exert more control over the Federal Reserve. This could disrupt the Fed’s delicate balance of managing inflation and employment, particularly if Trump pressures the Fed to lower interest rates, which contradicts the standard approach of raising rates to combat inflation. If Trump pushes his agenda on the Fed, it could destabilize economic confidence and spur inflation.

Additionally, Trump aims to extend the 2017 tax cuts set to expire in 2025. Extending these cuts would increase the national debt by $4 trillion to $5 trillion, a situation Trump seems unconcerned about. However, excessive debt could flood the market, equating to “money printing” and potentially fueling further inflation.

The 2024 election has four possible outcomes: either Trump or Biden could win with their party controlling Congress, or with a divided Congress. A unified government would enable the president to pursue a partisan agenda, while a divided Congress could block significant policies. If Republicans gain full control, inflation risks could escalate.

Goldman Sachs warns of higher inflation risks under a Republican sweep, citing Trump’s tariff plans and potential Fed interference. They also highlight that stricter immigration policies under Trump could exacerbate labor shortages, driving wages and prices higher.

Moody’s Analytics echoes these concerns, predicting higher inflation and weaker economic growth in a second Trump term due to new tariffs and reduced immigration. Oxford Economics also foresees Trump’s policies pushing inflation up by a full percentage point, potentially forcing the Fed to maintain or even raise interest rates to counteract these pressures. Such actions could provoke Trump to attempt firing Fed Chair Jay Powell.

While some voters recall Trump’s presidency as a period of low inflation, the post-COVID economy has changed drastically. Supply chain reshoring and labor shortages have increased costs, and tighter global energy markets have driven up prices.

Under Biden, inflation is trending back toward normal levels. Economists predict continued disinflation, eventual Fed rate cuts, stable trade policies, and moderate growth if he wins reelection. The most stable scenario would be a Biden win with a Republican-controlled Congress, which would block progressive Democratic legislation.

Despite Biden’s efforts, he faces voter skepticism and the challenge of overcoming “Trumpnesia,” where voters remember lower gas prices but forget Trump’s erratic pandemic response. A second Trump term could create very different economic memories.

Key Takeaways

  • Trump’s proposed tariffs and Fed control could significantly raise inflation.
  • Biden’s presidency has seen high inflation, but it’s trending back to normal.
  • A Republican sweep in 2024 might increase inflation risks more than a Democratic victory.
  • Economic analysts recommend gold as a hedge against potential inflation under Trump.


The 2024 election presents starkly different economic futures. While Biden’s approach aims for stability and gradual disinflation, Trump’s proposed policies could inject significant inflationary pressures. Investors and voters alike must weigh these potential outcomes as they look ahead to the next presidential term.


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