U.S. Inflation Charge by President: From Eisenhower to Biden

A president’s actions can play a task in influencing inflation. Nevertheless, as a result of inflation is a fancy phenomenon pushed by a spread of things, the connection between insurance policies and costs shouldn’t be all the time easy.

Inflation is mostly among the many prime issues for customers because it makes on a regular basis bills, corresponding to fuel, groceries, and utilities, costlier. As costs enhance, buying energy decreases, that means customers get much less for extra money. 

Let’s discover how inflation has fluctuated all through totally different presidential administrations.

When inflation is excessive, the Federal Reserve makes use of financial coverage to gradual the economic system down by growing the federal funds price, influencing rates of interest, and making borrowing cash costlier for customers and companies. The Federal Reserve has a goal annual inflation price of two%, and it makes use of financial coverage to maintain inflation in test and to stabilize the economic system when inflation rises above that benchmark. The Fed, economists, and governments carefully monitor the inflation price to find out if any motion must be taken to stabilize the economic system.

However whose fault is it when inflation rises too excessive or falls too low? How a lot management does the president have over inflation, and the way have the actions of presidents impacted the inflation price through the years? The solutions rely upon the particular financial circumstances and challenges of any interval in time. Nevertheless, the president may be vital in figuring out how the nation responds to a altering economic system and fluctuating costs.

Inflation has additionally traditionally been utilized by presidents and their administrations as a focus throughout elections and is mostly among the many prime issues of voters. Beneath are the typical year-over-year charges of inflation sorted by president, with a quick overview of occasions and financial circumstances that contributed to the numbers.

The common year-over-year inflation price was calculated through the use of the Seasonally Adjusted Shopper Value Index (CPI) for All Objects and taking the typical year-over-year adjustments at some point of every president’s time period. Resulting from knowledge availability, the listing begins with the presidency of Dwight D. Eisenhower.

Dwight D. Eisenhower (1953–1961) 

Common YOY Inflation Charge: 1.4%

The common year-over-year inflation price underneath President Dwight D. Eisenhower was 1.4%. Eisenhower ended the Korean Battle and had three recessions throughout his two phrases in workplace. Whereas inflation remained comparatively steady and low by means of the Fifties, curbing inflation was a precedence for the Eisenhower administration as there was nonetheless an total concern of inflation amongst People within the wake of the Korean Battle.

Eisenhower’s administration didn’t stimulate the economic system throughout these occasions as a way to preserve postwar inflation at bay. Eisenhower needed financial development with out inflation and caught to contractionary fiscal insurance policies, as he believed that having a finances surplus was the best way to keep up low inflation. 

John F. Kennedy (1961–1963)

Common YOY Inflation Charge: 1.1%

The common year-over-year inflation price underneath President John F. Kennedy was 1.1%. Inflation remained comparatively low from the top of the Fifties into the mid-Nineteen Sixties, a interval recognized for total worth stability. Kennedy’s administration helped finish the 1960 recession by growing spending and proposing tax cuts to stimulate the economic system. 

Lyndon B. Johnson (1963–1969)

Common YOY Inflation Charge: 2.6%

The common year-over-year inflation price underneath President Lyndon B. Johnson was 2.6%. Sworn in simply two hours after Kennedy’s assassination in November 1963, Johnson signed the tax cuts Kennedy proposed into legislation.

Whereas the Johnson administration’s expansionary measures boosted jobs and companies, inflation ticked again up within the mid-’60s. Inflation rose to an annual common of 4.5% in 1966 and hit an 18-year excessive of 5.75% in 1969. 

Richard Nixon (1969–1974)

Common YOY Inflation Charge: 5.7%

The common year-over-year inflation price underneath President Richard Nixon was 5.7%. Inflation rose increased by the top of the Nineteen Sixties after almost 20 years of relative worth stability. Whereas Nixon aimed to chill inflation with out inflicting a recession, the Nixon administration’s financial insurance policies led to a decade of stagflation ensuing from financial contraction and double-digit inflation.

The worth of the greenback additionally fell throughout Nixon’s presidency. The aftereffects of Nixon’s financial insurance policies are referred to as the Nixon Shock. Inflation underneath Nixon is the third-highest out of the presidents on this listing.

Gerald Ford (1974–1977)

Common YOY Inflation Charge: 8.0%

The common year-over-year inflation price underneath President Gerald Ford was 8.0%—the second-highest on this listing. The Ford administration inherited stagflation from Nixon’s time, lower taxes, and lowered regulation to stabilize the economic system. Whereas these insurance policies ended the recession, inflation continued to soar.

Jimmy Carter (1977–1981)

Common YOY Inflation Charge: 9.9%

The common year-over-year inflation price underneath President Jimmy Carter was 9.9%, the best inflation price amongst U.S. presidents thus far. Stagflation continued from the Nixon and Ford years and was exacerbated by an power disaster that led to skyrocketing fuel costs and shortages. Whereas increased power costs fueled inflation, core inflation (excluding risky meals and power costs) remained excessive by means of the Seventies.

Throughout Carter’s time period, the distress index—which is the unemployment price plus inflation—reached a file excessive of 21.98%. The Carter administration’s strategies to chill inflation by decreasing the finances deficit and deregulation to extend competitors and restrict worth will increase had been thwarted by a surge of power inflation in 1979, which pushed inflation over 13% by the top of 1979.

Ronald Reagan (1981–1989) 

Common YOY Inflation Charge: 4.6%

The common year-over-year inflation price underneath President Ronald Reagan was 4.6%. To fight the hovering and cussed inflation of the earlier decade, the Federal Reserve elevated the fed funds price to twenty%.

The Reagan administration’s response to the persistent stagflation was to introduce financial insurance policies that known as for widespread tax cuts, extra navy spending, decreased social spending, and deregulation of home markets. These insurance policies, referred to as Reaganomics, helped deliver inflation down, however critics of the insurance policies declare they added to the nationwide debt and deficit ranges and in addition widened the wealth hole.

George H.W. Bush (1989–1993) 

Common YOY Inflation Charge: 4.3%

The common year-over-year inflation price underneath President George H.W. Bush was 4.3%. Inflation ticked up briefly from 1989 to 1991 as fuel costs elevated at first of the primary Gulf Battle. The Bush administration additionally confronted a recession attributable to the Financial savings & Mortgage Disaster, which lasted from 1990 to 1991.

Invoice Clinton (1993–2001)

Common YOY Inflation Charge: 2.6%

The common year-over-year inflation price underneath President Invoice Clinton was 2.6%. Clinton confronted no recessions or main wars throughout his two phrases in workplace. Inflation additionally remained comparatively low throughout this time.

The Clinton administration and insurance policies, referred to as Clintonomics, lowered the U.S. nationwide debt and created a finances surplus of over $236 billion by fiscal yr 2000.

George W. Bush (2001–2009)

Common YOY Inflation Charge: 2.8%

The common year-over-year inflation price underneath President George W. Bush was 2.8%. Bush confronted the 2008 Nice Recession, thought-about essentially the most important financial downturn because the Nineteen Thirties Nice Despair. Inflation fell to 0.1% in December 2008 and dipped to destructive ranges (deflation, or destructive inflation) till late 2009.

The Bush administration despatched out tax rebate checks to offer reduction from the Nice Recession. Bush additionally confronted the 9/11 terrorist assaults (2001) and Hurricane Katrina (2005).

Barack Obama (2009–2017)

Common YOY Inflation Charge: 1.4%

The common year-over-year inflation price underneath President Barack Obama was 1.4%. Inflation remained comparatively low throughout Obama’s two phrases in workplace.

Having inherited the economic system in the course of the Nice Recession, Obama launched the American Restoration and Reinvestment Act (AARA), handed by Congress, and included $831 billion in authorities spending to finish the Nice Recession. The transfer, a part of what’s now referred to as Obamanomics, was controversial on the time, with its position in ending the 2008 monetary disaster nonetheless debated at present.

Donald Trump (2017–2021)

Common YOY Inflation Charge: 1.9%

The common year-over-year inflation price underneath President Donald Trump was 1.9%. Inflation remained low throughout Trump’s presidency.

When the COVID-19 pandemic hit in 2020, bringing a quick however extreme recession together with it, the Trump administration declared a state of emergency and handed stimulus measures such because the $2 trillion Coronavirus Assist, Reduction, and Financial Safety (CARES) Act in an try to offer reduction to people and companies. The financial insurance policies adopted by the Trump administration at the moment are referred to as Trumponomics.

Joe Biden (2021–)

Common YOY Inflation Charge: 5.2%*

The common year-over-year inflation price underneath President Joe Biden thus far is 5.2%. Biden signed the American Rescue Plan Act in 2021, a $1.9 trillion stimulus bundle to assist the nation get well from COVID-19. Within the wake of the COVID-19 pandemic restoration and the hovering fuel costs after the Russian invasion of Ukraine in 2022, inflation rose to file ranges not seen because the Eighties. Inflation peaked at 9.1% year-over-year in June 2022, the best enhance in 40 years.

The Fed responded by elevating rates of interest 11 occasions since March 2022 in an try to chill the cussed inflation. Whereas inflation did come down from its 2022 peak in 2023, it nonetheless stays above the Fed’s 2% goal. In September 2024, the Fed made its first price lower in 4 years. Biden’s financial insurance policies at the moment are known as Bidenomics.

*The common year-over-year inflation price for the Biden administration was calculated for the years 2021 to August 2024, since Biden’s time period remains to be ongoing.

The Backside Line

Whereas a president’s actions can have an effect on inflation, there are lots of different components that should be weighed when evaluating the basis causes behind worth will increase.

The president does affect fiscal coverage, and every president’s financial insurance policies—corresponding to tax cuts, navy spending, and authorities help—definitely do have an effect on the economic system. Nevertheless, many exterior components exterior a president’s management—corresponding to warfare, financial downturn, and public well being crises—additionally contribute to inflation.