The U.S. economy under former President Joe Biden can best be described as “mixed.” During his administration, the country experienced steady GDP growth, low unemployment and a roaring stock market. Those were the strong points.
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But it was also a time of great financial stress for middle-class families because of high inflation. As data journalist Felix Richter wrote in a November 2024 blog for Statista, while the broader economy emerged from the inflation crisis “relatively unscathed,” many American families didn’t.
“The main problem with inflation is the fact that it hits consumers right where it hurts: the wallet,” Richter wrote.
Soaring inflation was one of the biggest changes that middle-class families faced under Biden. Here’s a look at three of them.
Next, learn how stock market performance compared between President Donald Trump’s first term and Biden’s term.
Consumer Prices
Under Biden, the annual inflation rate peaked at 9.1% in July 2022 — the highest in more than 40 years. The rate eventually fall back to 2.4% by November 2024, according to Statista, largely because of Federal Reserve interest rate hikes. But by then, the negative impact was already felt.
The cumulative inflation rate under Biden was 21% and stayed above the Fed’s 2% target rate every month since 2021, CNBC reported. That compares to a cumulative rate below 8% during Trump’s first term.
How much of this was Biden’s fault is up for debate. He inherited an economy that was already reeling from the COVID-19 pandemic, which slowed production and distribution worldwide and led to massive supply-chain issues that eventually led to higher prices. But there’s no question that middle-class families — and everyone else — felt a lot of financial pain.
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Wages
Another change to middle-class families under Biden had to do with earnings. A FactCheck.org analysis of U.S. Bureau of Labor Statistics data found that real average hourly earnings for all private sector employees fell by 2.24% between January 2021 and May 2024. When wage growth lags the inflation rate, it means consumers don’t have as much buying power as they did before.
But things did improve later in Biden’s term, as the inflation rate rapidly declined.
Wages “substantially” outpaced inflation in 2023, according to the Center for Economic and Policy Research. Meanwhile, the “rapid pace of job creation” meant that a larger share of the population was working, which led to “considerably higher” real disposable income during the fourth quarter of 2023 vs. the pre-pandemic fourth quarter of 2019.
Home Prices
The pandemic also had a major impact on home prices during Biden’s term. It led to a shortage of new home construction that limited the housing supply in many U.S. markets, which sent prices soaring to record highs.
Prices continued to rise even during the final days of Biden’s term. As of January 2025, the median sales price for homes in the U.S. was $418,489, according to Redfin — a gain of 4.1% from the prior year.
This dynamic had a dual effect on middle-class families. On the one hand, higher home prices — combined with rising mortgage rates — made it much harder for them to afford to buy a home. But for homeowners with no plans to move, it significantly raised the values of their own homes and bolstered their net worth.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: 3 Biggest Changes to the Average Middle-Class Family’s Finances During Biden’s Presidency
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