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Average Gas Prices Were Slightly Higher Under Biden, But Trump Is Closing In Fast!

Average Gas Prices Were Slightly Higher Under Biden, But Trump Is Closing In Fast!

As I’ve come to realize in the last five years, people take the price of gas very seriously. It features very prominently in their assessment of the economy and their personal finances. For that reason, it is worth taking a quick look at what has happened to gas prices under Donald Trump and his predecessor, Joe Biden.

When Biden came into office, in January of 2021, gas was very cheap, selling for just under $2.40 a gallon. That was primarily because the economy was still feeling the effects of the pandemic. Unemployment was 6.4 percent, and we were down six million jobs from the pre-pandemic period.

The price rose quickly as the U.S. and world economy recovered, reaching $3.40 by February of 2022. Part of the reason for the rapid rise was that oil that had been taken out of production could not be instantly restarted once demand increased. Removing oil from production during the pandemic was a political decision taken in part by Donald Trump, in order to prevent oil producers from taking large losses.

Prices rose much further when Russia invaded Ukraine in February, and Biden responded by putting sanctions on Russian oil. The price peaked at over $5 a gallon in June but then fell back quickly as more oil came online. By the end of 2022, it had fallen to around $3.20 a gallon. It hovered around this level until Biden left office.

In January of 2025, when Donald Trump took office, the price was around $3.10 a gallon. It stayed around this level through most of the year, falling somewhat below $3.00 in December and bottoming out at $2.80 in January of 2026.

Then the decision to attack Iran sent gas prices soaring. They hit $4.00 a gallon by the end of March and peaked at over $4.50 a gallon in early May. Since then, they have bounced around in response to reports of peace agreements and new threats but have mostly been near $4.00 a gallon. (They are $4.08 today.)

Taking the averages to date, prices are still somewhat lower under Trump than under Biden: an average of $3.35 a gallon under Trump compared to $3.46 in the four years of the Biden administration.

However, this gap is being whittled away with gas over $4.00 a gallon due to the largely closed Strait of Hormuz. If gas prices are not brought down, Trump will soon be able to boast of having higher gas prices on average than Joe Biden.

Dean Baker is a senior economist at the Center for Economic and Policy Research and the author of the 2016 book Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer. Please consider subscribing to his Substack.


wage growth v inflation chart

Trump Economy: July Inflation Index Shows Wages Fell Further Behind Prices

The Consumer Price Index rose 0.1 percent in July, with the core rate rising 0.2 percent. Over the year, the overall CPI is up 3.4 percent, while the core is up 2.5 percent.

As always, there are a few seeming anomalies. Prescription drug prices fell 0.8 percent in July and are down 3.1 percent over the last year. Nonetheless, people are spending about 2.0 percent more on drugs this year than last year. Computer prices jumped 3.5 percent in July. This is the data center story.

Rent and owners’ equivalent rent both rose 0.3 percent in July, somewhat faster than in prior months, but this is mostly due to rounding. Over the year, the indexes are up 2.9 percent and 3.2 percent, respectively. Food prices fell 0.1 percent in the month but are still up 2.7 percent year-over-year. Lettuce prices plunged 16.4 percent. Any ideas how that could have happened?

One real anomaly was a 0.3 percent drop in the car insurance index, leading to a year-over-year decline of 4.5 percent. This sort of drop is unprecedented outside of the pandemic. There were some modest declines in 1998 and 1999, but other than that, the index has always risen and typically far outpaced the rest of the CPI.

I have noted the falling car insurance index before and waited for it to turn around, but it has continued to be on a downward path since the start of the year. I’m betting for the insurance index to turn around and start rising again, but I have been making that same bet for many months. It accounts for 2.6 percent of the index, so it matters. It was a major contributor to inflation in 2022 and 2023 when there were double-digit increases.

But stepping back from the specifics, this is a bad story for the economy. Inflation is not about to soar out of control, assuming Trump doesn’t do anything too crazy, but it is outpacing wages. Over the last year, the average hourly wage increased 3.2 percent. The annualized rate of increase over the last three months compared with the prior three was just 2.5 percent. This means that workers, who had already been feeling pressed, are falling further behind.

This is sort of good news from the standpoint of the Fed. It doesn’t have to worry about a wage-price spiral, but it does mean that we have an economy that will not be powered by workers’ consumption. With job growth having slowed to a crawl and real wages trending downward, workers will not have the means to increase consumption. This means that growth will be driven by AI investment and wealthy people spending based on stock gains and capital income. That does not look like a very solid basis for expansion.

Dean Baker is a senior economist at the Center for Economic and Policy Research and the author of the 2016 book Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer. Please consider subscribing to his Substack.


Not 'Liberated' Yet: Trade Deficit Hits Highest Level Since March 2025

Not 'Liberated' Yet: Trade Deficit Hits Highest Level Since March 2025

Donald Trump has made reducing the trade deficit a centerpiece of his economic agenda. As he has put it, the deficit means foreigners are ripping us off. Trump’s whole “Liberation Day” story was about putting an end to the rip-offs.

We can debate the extent to which the trade deficit means we are getting ripped off, but even accepting Trump’s claim, he is not doing a very good job by his own metric. On Tuesday, we got data from the Commerce Department showing that the monthly trade deficit jumped by $23 billion in May to $77.6 billion. The deficit would be $931 billion if this rate continued for a full year. This is the highest it’s been since March of 2025. If the trade deficit measures the extent to which we’re being ripped off, we’re going the wrong way.

To be clear, the story is a bit more complicated. The trade deficit had averaged $70.9 billion through the first ten months of 2024. It then jumped after the election, hitting $96.9 billion in December, as people rushed to buy cars, appliances, and other big-ticket items, and businesses stocked their inventories, before Trump’s promised tariffs went into effect.

It rose further in the first three months of 2025 as people became more convinced that Trump was serious about his tariffs. The peak was $133 billion in March. The deficit then fell sharply in April. Part of this story was the impact of the tariffs themselves, and part was that people who had bought cars and other big-ticket items in anticipation of the tariffs were not about to buy them again.

The impact of people buying in anticipation of tariffs had probably worn off by the start of this year, so we could see the direct impact of tariffs on the trade deficit. The average for the first four months of 2026 was $55.1 billion. That would translate into an annual trade deficit of $661 billion, a bit more than 2.0 percent of GDP. That is down from the $850 billion annual rate we had in the first ten months of 2024, but still far from balanced trade for those who care about such things.

But we then took a big step in the other direction in May. It seems the main story here is imports of AI-related capital goods. Imports of capital goods were $1.1 billion higher in May than they had been in April and $17.2 billion higher than they had been in January.

Many of the computer chips and other items that the big AI companies need for their data centers are imported, mostly from Taiwan and South Korea. If we think the trade deficit means we are being ripped off by foreigners, the AI bubble is increasing the extent of the rip-off.

Monthly trade data are highly erratic, and it’s possible that the May jump will be reversed in June or subsequent months. But for now, the data make it look like Liberation Day didn’t have its intended effect.

Dean Baker is a senior economist at the Center for Economic and Policy Research and the author of the 2016 book Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer. Please consider subscribing to his Substack.

Troubling Signal: 'Fast-Food Index' Of Consumer Sentiment Is Falling Fast

Troubling Signal: 'Fast-Food Index' Of Consumer Sentiment Is Falling Fast

For the last several years, I’ve been using real spending at fast food restaurants as a gauge for assessing how the non-rich are feeling about their personal finances. The logic is that it is a type of discretionary spending where people can easily make cutbacks if they are feeling squeezed.

Also, it should not be affected much by the spending of the rich. It’s not likely that Elon Musk eats more Big Macs when his wealth increases or he cuts back when SpaceX’s stock plunges.

And to be clear, I’m not saying the rich don’t eat fast food. I’m sure they do. The claim is just that their consumption of fast food is not affected much by changes in their short-term financial situation.

Anyhow, the story the index has been telling us in the last year is not a good one.


After rising at a healthy pace through 2023 (the January number was an upward blip), spending had been largely flat through 2024 and the first half of 2025. It then rose in the summer and peaked at an annual rate of $386.2 billion in September. Since then, it has fallen sharply, hitting $366.8 billion in May, a decline of just over 4.0 percent from its peak.

That would seem to indicate that people are feeling pretty bad about their economic situation. This is consistent with the bad numbers being reported in the consumer confidence indexes.

I’ve had people suggest to me that this decline could be driven by the increased use of Ozempic or related drugs. This would be a positive spin, since it would probably be good for people’s health if they consumed less fast food.

Unfortunately, that does not seem likely to explain this sort of decline. By 2024, 12 percent of the adult population was already taking a GLP-1 drug. The increase in usage did not prevent fast-food consumption from rising rapidly in 2023 and at least staying flat in 2024.

The number of people using these drugs has undoubtedly continued to rise, but probably not by enough to explain the sharp drop in consumption over the last 8 months. The drop in spending is likely giving us bad news about the state of the economy, not good news on public health.

People’s negative assessments of the economy continue to be somewhat of a mystery. The recent run-up in gas prices and inflation more generally is unambiguously bad news, but is this the worst economy ever, as some of the consumer confidence measures have been showing? Real income for those at the middle and bottom has generally been rising by standard measures, so it seems that we’re missing something, and I’m not sure any of us have figured out what.

The fast-food index is telling us what people do and not just what they say. And what they do is telling us that they don’t feel very good about the economy.

Dean Baker is a senior economist at the Center for Economic and Policy Research and the author of the 2016 book Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer. Please consider subscribing to his Substack.

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