Trump is righting the economic ship after the Biden disaster

The White House and America at large have much to celebrate after the last week of economic reports.

Inflation is down, the labor market is robust, and people’s paychecks buy more than a year ago.

Even better, the Trump administration’s recent actions will build on this progress and deliver more good news in the months and years ahead.

The latest glad tidings come thanks to the tax and regulatory reform the Trump administration has enacted, along with the unprecedented reductions it’s made in the federal bureaucracy.

In just one year, the administration’s economic strategy has been astonishingly successful and completely course-corrected after the failures of Joe Biden and the radical left.

The federal workforce has been reduced by more than 300,000 since President Trump took office and is at its lowest level since 1966.

You have to go back six decades to find a time when there were fewer federal-government employees than today.

As a percentage of the overall workforce, the federal bureaucracy is down to the lowest level on record.

And as government jobs decline, employment in the productive private sector is growing at a fast clip, up more than 170,000 in the month of January.

Contrast this with the same month one year ago, when Biden handed the economy off to Trump.

In January 2025, the private sector lost 76,000 jobs, while bureaucratic government jobs grew by 28,000.

The situation has now reversed, but that’s not the only way in which Trump has flipped the script.

A restaurant sign outside this month reflects the robust labor market. AP

Under Biden’s tenure, inflation outpaced wage growth so much that the average American’s weekly paycheck shrunk in terms of what it could buy, falling about 4%.

After one year with Trump back at the helm, the average weekly paycheck buys about 2% more than it did in January 2025.

This increase in purchasing power hasn’t made up for all the lost ground under Biden, but it’s a tremendous start.

It’s also worth noting who’s being hired in Trump’s economy.

During the first year of his second term, all the net job growth went to native-born Americans, whose employment level rose by 840,000, while foreign-born workers lost 97,000 jobs. Yet again, this is a welcome reversal.

In 2024, the final year of Biden’s term, the annual employment change among native-born Americans was negative almost every month.

That means Americans were losing jobs in those months, and the supposed job growth was going to foreign-born workers, which included an unknown number of illegal aliens.

President Trump’s economic strategy has course-corrected after the failures of Joe Biden and the radical left. AP

What’s more, the Labor Department also had to revise down, yet again, its previous jobs estimate for Biden’s final year.

It turns out that roughly half of all the job growth that had been initially reported for 2024 never existed.

But now Trump’s strategy of shrinking government and allowing the private sector to thrive is seriously paying dividends.

It’s not just a matter of diminishing the number of government employees but also diminishing the burdensome regulatory state and reducing how much government takes in income taxes.

Economic growth is picking up because of tax reform, regulatory reform and energy reform.

Although the economy shrunk in the first quarter of 2025, it grew at a healthy 3.8% annualized rate in the second quarter and 4.4% in the third quarter, according to the Bureau of Economic Analysis. The Federal Reserve Bank of Atlanta estimates fourth-quarter growth to have been 3.7%.

With Trump’s Environmental Protection Agency rolling back the Obama-era regulatory overreach on automobiles and energy, the economic outlook has brightened even further.

This will mean added discounts for consumers and businesses, along with more American jobs.

Further reductions in energy prices and other inputs are going to put even more downward pressure on inflation, which has already dropped significantly from its 40-year high under Biden.

The consumer price index showed an annual inflation rate in January of just 2.4%, down from 2.7% in December.

Even better, when outliers are removed from the CPI, annual inflation is at its lowest level in almost five years, as evidenced by core CPI (which excludes volatile food and energy) as well as median and trimmed-mean CPI (which exclude the fastest and slowest price increases).

Each of these three indexes in January shows the lowest annual inflation since 2021.

Despite all the good news from this past week, there’s still a lot of work to be done.

The Biden administration and the big spenders in Congress did a tremendous amount of damage, but Trump and his team are quickly righting the ship.

If they stick to their winning strategy, nothing will be able to hold back the American economy.

E.J. Antoni, PhD, is chief economist and the Richard Aster fellow at the Heritage Foundation and a senior fellow at Unleash Prosperity.