Donald Trump is back in the White House, stepping into an economy that is already doing well. The U.S. job market is strong, with businesses hiring and wages rising. In January alone, the economy added 143,000 jobs. People are working, and companies are making money. Sounds great, right? But things are not so simple.
Under Joe Biden, the economy recovered from the COVID-19 crisis. Unemployment dropped to just 3.4% at one point, the lowest since the 1960s. Black unemployment hit a record low of 4.8% in 2023, though it later increased. Many new jobs were created, and industries like hospitality and retail saw strong growth. Immigration and remote work also helped keep businesses running smoothly.
Now, Trump faces a challenge. The job market is already in good shape. He promised to create more jobs, but how? President of the Chicago Federal Reserve, Austan Goolsbee said, “If you could freeze the job market just exactly where it is, that is not a bad spot.” But the economy is always moving—nothing stays the same for long.
If Trump tries to boost jobs too much, inflation could rise. When wages grow too fast, companies raise prices, making everything more expensive. The Federal Reserve wants to keep wage growth under 4% to control inflation. Right now, it is slightly above that. If Trump pushes too hard, we could see rising prices and economic trouble. We’ve seen this happen before. In the 1960s, the economy was booming, but inflation got out of control, leading to a slowdown in the 1970s. In the early 2000s, George W. Bush cut taxes and spent a lot, which helped cause the Great Recession. Trump will have to be careful not to repeat these mistakes.
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One big difference between Biden and Trump is immigration. Under Biden, many new workers came from other countries. This helped businesses find employees and kept wages steady. But Trump wants stricter immigration laws. This could mean fewer workers for industries that rely on them, like construction, agriculture, and hospitality.
If businesses can’t find enough workers, wages might rise too fast, pushing prices higher. This could lead to inflation, which hurts everyone. A Reuters report pointed out that both Trump and Biden tried to bring back factory jobs, but the results were mixed. While some jobs returned, many did not. The same challenge remains today.
Another major concern is Trump’s tariff policies. Consumer confidence has dropped, with about one-third of consumers spontaneously mentioning tariffs in a recent survey—up from just 2% before the election. Many fear that higher tariffs will increase costs for businesses and consumers, making inflation worse. This marks only the fifth time in 14 years that such a large one-month rise in inflation expectations has been recorded. If consumers pull back on spending due to these fears, the economy could slow down further
In a recent interview, Trump was asked about job growth. He claimed his economic policies would create even more jobs. However, the data shows that the economy is already adding jobs at a steady pace. Some experts worry that pushing for even more job growth could backfire. Trump normally says that his policies will make America stronger than ever. But economists warn that too much job growth too fast could make inflation worse. The Federal Reserve is watching closely to see what happens next.
So what should Trump do? Maybe the best move is to let the economy continue on its path. But Trump is not known for sitting still. If he pushes too hard, inflation could rise. If he slows things down too much, job growth could stall.
Featured image via Political Tribune Gallery
