Unwrapping Trump’s Claims That Contracting GDP is Biden’s Fault

Click the image if you’d like to read the article explaining why Trump blames Biden for the developing economic mess.

Where do we start?

Oh, I know. How about early in 2024 when I was like a broken record writing about the Biden administration propping the economy and markets (by various means, beyond the scope of this post) with an oh so divisive election upcoming?

How about Biden’s Treasury Secretary and former Fed chief, Janet Yellen, presumably with the ear of the current Fed chief?

How about that the 2024 rate cut regime sure did seem fishy in its tactical timing for max effect, pre-election? That rate cut regime was at least temporarily halted after the December cut, prior to Trump taking office. Hmm…

Okay, the tin foil hat has had its say. But our theme back in 2024 was that Trump was going to be left with a giant pile of policy manure to clean up. Indeed, it was a contrarian’s dream as we looked ahead and projected that just as America got “great again”, the economic and market signals would indicate no such thing.

Contracting GDP Was Baked In

There were signals aplenty throughout 2024 that we’d have contracting GDP, and a full-on economic counter-cycle, regardless of what Trump might do in his first few months in office. Trump threw gasoline on the fire that Biden left him by impulsively and chaotically implementing his economic/trade policies in a sort of trial and error fashion. Tariff on, tariff off, wax on, wax off. Not good.

But as I took pains to note last year, yield curves were/are steepening (implying an economic bust to come), the 2yr Treasury yield had negatively diverged the Fed Funds rate (a precursor to the last two major bear markets), market sentiment was way too bullish and valuations way to extended. Those added an unrealized “risk” element to the degrading indicators.

Here’s the yield curve picture with SPX. A bust was and still is in the cards.

The bottom line is that Trump was always set up to fail. It’s just that in true Trumpian fashion, he had to get right out front and center and put his stamp on it (and thus, in the eyes of the public, own it). From the linked article:

Ah Mr. President, you know and so does everybody else that if things had gone well so far in 2025 you’d be owning that. So, for better or worse, you own this. It’s politics, baby. Maybe you’ve forgotten this? It’s politics, baby.

Moving on…

As a former US manufacturing person, I happen to be the camp that believes there has been much wrong done over recent decades, impairing US manufacturers and other “dirty” industries on the world stage, as America became a massive services-based consumption engine. I also think that “reciprocal” tariffs are fair play where needed. But it’s the erratic and bombastic way Trump has gone about it that has caused a lot of the short-term grief he blames on Biden.

This X post rationally explains why most of the tariff pain has not even hit our shores yet.

Biden actually left us with okay numbers, even though they were gerrymandered. There was no overhang in the economy. The overhang was in the policy beneath the surface that was going to unwind under Trump’s (and all of our) feet.

In conclusion, the coming economic contraction and recession are going to be the gift that Biden keeps on giving. Trump should understand that and work with it, while tactically implementing economic policies over time rather than throwing grenades all over the place, making the situation potentially much worse in the near-term.

For “best of breed” top-down macro analysis and market strategy covering Precious Metals, Commodities, Stocks and much more, subscribe to NFTRH Premium, which includes a comprehensive weekly market report, detailed NFTRH+ updates and chart/trade setup ideas, and Daily Market Notes.