The One-Sentence Version
Inflation spiked worldwide after COVID because of supply chain breakdowns, trillions in pandemic stimulus from both parties, a slow-to-react Federal Reserve, and Russia’s invasion of Ukraine, and the U.S. ultimately brought it down faster than any other major economy without triggering a recession.
Why Does a Dozen Eggs Cost So Much?
If you feel like everything got more expensive under Biden, you’re not imagining it. Consumer prices rose 21.5% over his four years.[1][23] Eggs went up 54%. Milk went up 36%. Gas went up 31%.[1][9]
Those numbers are real and people felt them every week at the grocery store. No amount of context erases the sticker shock of watching your monthly bills climb while your paycheck didn’t keep up.
But “prices went up under Biden” and “Biden caused prices to go up” are two different claims. The first is a fact. The second requires looking at what actually drove the increases, when they started, and whether any president could have prevented them.
What Drives Prices Up? A Quick Primer
Inflation means the general price level is rising. It has three main drivers:
Too much money chasing too few goods. When people have more money to spend but the supply of goods hasn’t changed, sellers can raise prices. This is what happened when COVID stimulus checks hit bank accounts while factories were still shut down.[16]
Supply disruptions. When it costs more to make or ship something, those costs get passed to buyers. This is what happened when container shipping costs jumped 330%[17] and semiconductor shortages idled auto factories.
Energy shocks. Oil and gas prices ripple through the entire economy because nearly everything is transported by truck, train, or ship. When Russia invaded Ukraine, oil spiked above $130 a barrel[7] and the effects showed up in the price of almost everything.
All three hit at the same time between 2021 and 2022. That combination hadn’t happened in over 40 years.
What Actually Caused the Inflation Spike
COVID broke the supply chain
The pandemic shut down factories, ports, and transportation networks worldwide. The disruption was staggering in scale:
- Container shipping costs from Asia to the U.S. West Coast went from roughly $1,800 per container before COVID to over $26,000 in late 2021.[17]
- The global semiconductor shortage cost the auto industry an estimated $210 billion in lost revenue in 2021 alone.[17]
- China’s port closures (Yantian shut for three weeks in mid-2021, Ningbo-Zhoushan for two weeks shortly after) created backlogs that took months to clear.[17]
A study by former Federal Reserve Chair Ben Bernanke and economist Olivier Blanchard, published through the Brookings Institution, concluded that supply-linked factors accounted for “the vast majority” of the pandemic inflation surge.[17]
Both parties pumped trillions into the economy
Between 2020 and 2021, Congress passed approximately $4.6 trillion in pandemic relief.[22] The breakdown:
| Package | Date | Amount | President |
|---|---|---|---|
| CARES Act | March 2020 | $2.2 trillion | Trump |
| December 2020 relief | December 2020 | ~$900 billion | Trump |
| American Rescue Plan | March 2021 | $1.9 trillion | Biden |
Trump-era stimulus totaled roughly $3.6 trillion. Biden’s American Rescue Plan added $1.9 trillion.[22][11] Both were passed with bipartisan support or broad political backing at the time. Both put money directly into people’s pockets through stimulus checks, expanded unemployment benefits, and business loans.
Economists disagree about how much this spending drove inflation. An MIT Sloan study found federal spending was “two to three times more important than any other factor” in the 2022 price spike.[20] Bernanke and Blanchard’s Brookings study reached a different conclusion, finding supply disruptions mattered more and calling the argument that stimulus was excessive “weak.”[17]
The honest answer is that both the supply shock and the demand boost contributed. The $4.6 trillion in combined stimulus, hitting an economy with constrained supply, was gasoline on a fire that was already burning. Economists argue about the ratio. Nobody credibly argues that either factor alone explains 9.1% inflation.[1]
The Federal Reserve waited too long
The Fed kept interest rates near zero from April 2020 through early 2022.[7] Chair Jerome Powell initially called the inflation “transitory,” expecting supply chains to normalize on their own. When the Fed finally started raising rates in March 2022, inflation was already at 8.5%.[1]
Eleven rate hikes followed, pushing the federal funds rate from near zero to 5.25-5.50% by July 2023.[7] Most economists now agree the Fed should have started tightening sooner, though the optimal timing remains debated.
Russia invaded Ukraine
In February 2022, Russia’s invasion of Ukraine sent energy and food prices surging. Oil jumped above $130 per barrel.[7] Ukraine and Russia are major wheat and fertilizer exporters, and the disruption pushed food prices to their highest levels since 1979.[9]
The invasion coincided almost exactly with the worst phase of U.S. inflation. Gas prices, which had been rising, hit their peak of $5.02 per gallon in June 2022 partly because of the war.[6]
This happened everywhere, not just the United States
If Biden’s policies were the main cause, you’d expect U.S. inflation to be significantly worse than other countries. The opposite was true. Peak inflation rates in 2022:[13]
| Country | Peak Inflation |
|---|---|
| UK | 11.1% |
| Eurozone | 8.5% |
| United States | 9.1% |
| Germany | 6.9% |
| Canada | 6.8% |
| World average | 7.9% |
Every major economy experienced elevated inflation. The UK peaked higher than the U.S. Germany, which had no comparable stimulus program, still hit 6.9%. The global nature of the spike points to global causes: supply chains, energy, and food disruptions that no single president controlled.[13][17]
Companies raised prices beyond their costs
Corporate profit margins tell a revealing story. Nonfinancial corporate profit margins jumped from about 13% before the pandemic to roughly 19% in mid-2021, according to Federal Reserve data.[12]
The Kansas City Federal Reserve found that markups accounted for more than half of the inflation in 2021, a share far larger than profits typically contribute.[15] The Economic Policy Institute calculated that 53.9% of price increases between April 2020 and December 2021 went to profit margins, while labor costs contributed less than 8%. Historically, profits account for only about 11% of price growth.[21]
One important caveat: the Kansas City Fed also found that profit contributions to inflation fell significantly in 2022, following a pattern seen in past recoveries.[15] Companies tend to raise prices aggressively early in a recovery when demand is strong, then see their margins compress as costs catch up. This doesn’t mean the 2021 markups weren’t real. It means interpreting them requires context about normal business cycle patterns.
What Actually Happened With Gas Prices
Gas prices are what most people noticed first and felt most acutely. Here is the timeline, using Energy Information Administration data:[6]
| Year | Average Price/Gallon | What Was Happening |
|---|---|---|
| 2019 | $2.60 | Pre-pandemic baseline |
| 2020 | $2.17 | COVID demand crash (people stopped driving) |
| 2021 | $3.01 | Recovery, demand returns |
| 2022 | $3.95 (peaked at $5.02 in June) | Russia-Ukraine war, OPEC cuts |
| 2023 | $3.52 | Prices declining |
| 2024 | $3.30 | Continued decline |
The June 2022 peak of $5.02 was driven primarily by the Ukraine war sending global oil above $130 a barrel, compounded by OPEC+ production cuts.[6][7] In October 2022, Saudi Arabia and Russia cut output by 2 million barrels per day, keeping prices elevated.[34]
The OPEC deal Trump brokered — and its consequences
In April 2020, oil prices had collapsed. COVID killed demand — people stopped driving, flights were grounded, factories shut down. U.S. crude fell below $20 a barrel. On April 20, futures briefly went negative: traders were paying people to take oil off their hands.[35] American shale companies were going bankrupt at a pace not seen since the 2008 financial crisis. Dozens of producers filed for bankruptcy representing $26 billion in debt.[35]
Trump personally intervened. On April 2, he called Saudi Crown Prince Mohammed bin Salman. According to a Reuters investigation citing U.S. officials briefed on the call, Trump told MBS that unless OPEC cut production, he would be “powerless to stop lawmakers” from passing legislation to withdraw U.S. troops from the kingdom. MBS was reportedly so taken aback that he ordered aides out of the room.[31]
On April 12, Trump announced the deal in a tweet: “The big Oil Deal with OPEC Plus is done. This will save hundreds of thousands of energy jobs in the United States.”[35]
The agreement cut global production by 9.7 million barrels per day — roughly 10% of world supply. It was the largest coordinated production cut in OPEC history.[27] Energy historian Daniel Yergin called it the “biggest deal” of Trump’s career.[35]
The deal had defensible logic at the time. Without it, the U.S. shale industry faced mass collapse. Hundreds of thousands of energy jobs were at risk. Stabilizing prices was a reasonable crisis response.
But the supply constraints that deal created didn’t go away when demand came back. The agreement included a tapering schedule that extended through April 2022, and OPEC+ consistently underproduced even relative to its own quotas.[32] By the end of 2021, actual production was 650,000 barrels per day below target. By August 2022, the gap had widened to 1.4 million barrels per day.[32] Some member nations simply couldn’t pump more after years of underinvestment during the downturn.
When Biden’s National Security Adviser Jake Sullivan publicly called on OPEC+ to increase production faster in August 2021, saying 400,000 barrels per month was “simply not enough” during the recovery, OPEC+ refused.[33] Saudi Arabia, Russia, Iraq, Kuwait, and the UAE all signaled they would stick to the existing schedule.
Then in October 2022, five weeks before the midterm elections, OPEC+ cut another 2 million barrels per day.[34] The Biden administration had lobbied Saudi Arabia heavily against the cut. Saudi Arabia later stated that the White House had asked them to postpone it by one month — which would have pushed it past the midterms. The Saudis declined, insisting the decision was “purely economic.”[34]
The supply side of the gas price story, in short: Trump brokered a deal in 2020 that constrained global oil supply.[27][31] That deal’s effects persisted through 2022.[32] OPEC+ unwound it slowly, underproduced against its own targets, rejected Biden’s requests to speed up, and then cut production again right before the midterms.[33][34] None of this is the whole explanation for $5 gas — the Ukraine war and refinery constraints mattered too — but it’s a significant piece that often goes unmentioned.
Did Biden’s policies cause the spike?
The most common claim is that Biden’s cancellation of the Keystone XL pipeline and his pause on new federal drilling leases restricted supply and raised prices.
The data doesn’t support this.
U.S. crude oil production under each president, in millions of barrels per day (EIA data):[5]
| Year | Production | President |
|---|---|---|
| 2019 | 12.3 million b/d | Trump (record at the time) |
| 2020 | 11.3 million b/d | Trump (COVID drop) |
| 2021 | 11.3 million b/d | Biden (still recovering) |
| 2022 | 12.0 million b/d | Biden (near 2019 levels) |
| 2023 | 12.9 million b/d | Biden (new all-time record) |
| 2024 | 13.2 million b/d | Biden (broke own record) |
The United States produced more oil under Biden than under any president in history. Production hit 13.2 million barrels per day in 2024, surpassing Trump’s 2019 record by nearly a million barrels daily.[5][26]
As for Keystone XL, the State Department’s own Environmental Impact Statement concluded that the pipeline’s approval or denial “would be unlikely to significantly impact Canadian oil sands production.”[28] The pipeline would have carried Canadian tar sands oil, primarily for export. It was not a gasoline pipeline and wouldn’t have materially changed U.S. gas prices.
The Strategic Petroleum Reserve
Biden authorized releasing 180 million barrels from the Strategic Petroleum Reserve starting in March 2022, the largest release in SPR history. The Treasury Department estimated the releases reduced gas prices by 17 to 42 cents per gallon.[10]
The releases drew the reserve to its lowest level since the 1980s, which drew criticism. The administration later repurchased oil at around $70-75 per barrel, compared to selling at roughly $96 per barrel, effectively locking in a profit for the government.[30]
Refinery capacity
A less discussed factor: about a million barrels per day of U.S. refining capacity was lost between 2020 and 2022.[29] Pandemic-era closures shut down unprofitable plants, and they didn’t reopen when demand returned. Remaining refineries ran at 94% capacity, the highest utilization since 2019.[29] Even with record crude production, bottlenecks at the refining stage constrained the gasoline supply.
How the Economy Actually Performed
The inflation story dominates public memory of Biden’s economy. But the broader data tells a more complicated story.
GDP growth
| Year | Real GDP Growth |
|---|---|
| 2021 | 5.8% (recovery bounce) |
| 2022 | 1.9% |
| 2023 | 2.5% |
| 2024 | 2.8% |
All four years showed positive growth. No recession occurred, despite widespread predictions of one in 2022 and 2023.[4]
Job creation
The economy added approximately 16 million jobs over Biden’s term, the largest single-term increase in Bureau of Labor Statistics records going back to 1939.[2][23]
Context matters here. Roughly 72% of those gains were recovering pandemic-era job losses, not entirely new positions.[23] Net new jobs beyond the pre-pandemic peak were approximately 7.2 million, which is still a strong number by historical standards. The economy added 531,000 manufacturing jobs over the term.[2][23]
Unemployment
Unemployment fell from 6.4% at inauguration to 4.0% at departure.[3][23] It dropped as low as 3.4% in April 2023, the lowest rate since 1969.[3]
Stock market
The S&P 500 returned roughly 58% over Biden’s term.[23] It lost 19% in 2022 (the year of aggressive rate hikes) but gained 24% in 2023 and 23% in 2024. All three major indexes set multiple all-time records.
International comparison
The U.S. outperformed every other G7 economy on recovery.[14][18] U.S. GDP was 5.4% larger in early 2023 than before the pandemic, the best performance in the group.[14] The U.S. recovered all pandemic GDP losses by the third quarter of 2021, faster than any peer.[18]
By late 2024, the U.S. had achieved the lowest headline and core inflation among G7 countries.[14][23] Multiple economists described the outcome as a “soft landing” — bringing inflation down without triggering a recession — and called it exceptionally rare.
Why It Felt Worse Than the Numbers Suggest
This is perhaps the most important section. If the economy was performing well on paper, why did most Americans say it wasn’t?
Prices didn’t come back down
This is the single biggest factor. Inflation falling from 9% to 3% doesn’t mean prices dropped. It means prices kept rising, just more slowly.
A dozen eggs that cost $1.50 in 2020 cost over $2.30 by 2024.[1][9] The annual inflation rate had normalized, but the eggs still cost more. Every trip to the grocery store reinforced the feeling that things were worse, even as the rate of increase slowed. Overall food prices rose 23.6% over Biden’s term.[9][23]
Real wages lagged
From 2021 through mid-2023, inflation outpaced wage growth.[23] Workers got bigger raises than they had in years, but prices rose faster. The turning point came around mid-2023, when wage growth finally began outpacing inflation. By late 2024, real wage growth had returned to its pre-pandemic level.
But over the full four years, private-sector average weekly earnings shrank about 4% after adjusting for inflation, according to FactCheck.org.[23] Even though the economy was adding jobs at a historic pace, most workers’ paychecks bought less than they did before.
The partisan perception gap
Polling data reveals something striking. Gallup’s Economic Confidence Index showed Republicans’ confidence dropped 35 points in the month after Biden’s inauguration, before any economic policy had taken effect.[25] Democrats’ confidence rose 49 points over the same period.[25]
University of Michigan data showed Republicans rated the economy worse than during the Great Recession, when the country was losing hundreds of thousands of jobs per month.[8] Pew Research found 44% of Democrats rated the economy as excellent or good, versus 13% of Republicans, while both groups were living in the same economy.[24]
The partisan gap in economic sentiment was larger than gaps across income, age, or education level.[24] In other words, your party affiliation predicted how you felt about the economy more reliably than how much money you actually made.
This isn’t unique to Biden’s presidency. The same thing happens in reverse under Republican presidents. It reflects the degree to which economic perceptions have become an expression of political identity rather than a response to personal financial conditions.
Media coverage amplified the negative
A Brookings Institution study found that economic news coverage from 2021 to 2023 was significantly more negative than the underlying economic data warranted.[19] The “negativity gap” was about one-third larger than in the prior three-year period. They estimated the economy would have needed inflation consistently 2 percentage points higher or GDP growth 3 percentage points lower for the negative coverage to be justified.[19]
Common Claims and What the Evidence Shows
”Biden caused the inflation”
Biden’s American Rescue Plan contributed to demand-side pressure.[20][16] That’s real. But it was one cause among several: COVID supply disruptions,[17] $3.6 trillion in Trump-era stimulus,[22] the Fed’s zero-rate policy,[7] Russia’s invasion of Ukraine, OPEC production cuts,[27] and corporate margin expansion[15][21] all played roles.
The global nature of the inflation surge, with the UK, Eurozone, and most major economies experiencing comparable or worse inflation, undercuts the claim that one president’s domestic policy was the primary driver.[13]
“Biden had the best economy ever”
By some metrics, yes. Record job creation,[2] near-record-low unemployment,[3] record stock market levels, record oil production.[26] By the metric that matters most to families, purchasing power, the picture was painful. Cumulative price increases of 21.5% over four years erased much of the wage growth.[1][23]
The honest assessment: the macro-level economy was historically strong. The household-level experience was harder than the macro numbers suggest. Both of those things are true at the same time.
”Gas prices were high because Biden shut down drilling”
U.S. oil production set consecutive all-time records under Biden, reaching 13.2 million barrels per day in 2024.[5][26] The Keystone XL cancellation and federal lease pause did not reduce overall U.S. production, which was driven primarily by production on private and state lands.[28] Gas prices spiked because of global factors: Russia’s invasion, OPEC cuts,[27][32] and refinery capacity constraints.[29]
“Biden drained the Strategic Petroleum Reserve for political reasons”
Biden did release 180 million barrels from the SPR, which was significant. The Treasury estimated it lowered gas prices by 17-42 cents per gallon.[10] The administration later repurchased at lower prices.[30] Whether this was appropriate crisis management or political manipulation depends on your priors, but the price-lowering effect was real and documented by the Treasury Department.[10]
“The stock market doesn’t matter to regular people”
About 58% of American households own stocks, primarily through 401(k) retirement accounts and pension funds.[23] Stock market gains under Biden meant most retirement accounts grew significantly, particularly in 2023 and 2024. That said, stock gains disproportionately benefit wealthier households with more invested, and they don’t help with this month’s grocery bill.
”Inflation is still high”
By the end of Biden’s term, annual inflation had fallen to around 2.9%, close to the Fed’s 2% target.[1][23] But prices themselves remain elevated. Inflation measures the rate of change, not the level. Prices almost never go back down in a modern economy. What happened is that prices surged 21.5% and then mostly stopped surging. The new price level is permanent.
Where Things Stand Now
Inflation has largely normalized. Annual CPI was 2.9% at the end of Biden’s term, down from the 9.1% peak in June 2022.[1]
Gas prices had fallen to around $3.30 per gallon by December 2024, down from the $5.02 peak.[6]
The U.S. avoided a recession, achieving what economists call a “soft landing” — inflation came down without a spike in unemployment or contraction in GDP.[4][3] The last time this happened was 1994-1995, and many economists considered it the best-case outcome.
Cumulative price increases from 2021-2022 remain baked into the economy. Groceries, housing, and services all cost more than they did before the pandemic, and those prices are unlikely to fall.[1] Wages have caught up for many workers, but not all.[23]
The economy Biden handed off had 4.0% unemployment,[3] 2.8% GDP growth,[4] and inflation near target.[1] Whether that constitutes a success depends on whether you weigh the destination or the journey. The destination looks strong. The journey — two years of real purchasing power losses while inflation raged — was genuinely painful.
Sources
5. EIA: U.S. Crude Oil Production
7. FRED: Federal Reserve Economic Data
8. FRED: Consumer Sentiment Index
10. Treasury: SPR Price Impact Analysis
11. CBO: Historical Budget Data
12. Federal Reserve: Corporate Profits After COVID-19 (Sept 2023)
13. Federal Reserve: Fiscal Policy and Excess Inflation (July 2022)
14. Federal Reserve: Why U.S. GDP Recovered Faster (May 2024)
15. Kansas City Fed: Corporate Profits and Inflation (2023)
16. St. Louis Fed: Demand-Supply Imbalance During COVID (Dec 2022)
17. Brookings: What Caused Pandemic-Era Inflation? (Bernanke & Blanchard)
18. Brookings: U.S. Recovery in International Context
19. Brookings: Economic News Negativity and Consumer Sentiment
20. MIT Sloan: Federal Spending and Inflation
21. EPI: Corporate Profits and Inflation
22. GAO: COVID-19 Relief Spending Report
23. FactCheck.org: Biden’s Final Numbers
24. Pew Research: Views of the Economy (Jan 2024)
25. Gallup: Economic Confidence Index
26. EIA: U.S. Produces More Than Any Country in History
27. EIA: OPEC+ Production Agreement (2020)
29. EIA: U.S. Refinery Capacity (June 2022)
30. DOE: SPR Repurchase Program
31. Reuters: Trump Told Saudi — Cut Oil Supply or Lose U.S. Military Support (April 2020)
32. Dallas Fed: OPEC+ Underproduction Analysis (April 2022)
33. CNBC: White House Says OPEC Action “Simply Not Enough” (Aug 2021)
34. CNBC: Biden Admin Asked Saudi Arabia to Postpone OPEC Cut (Oct 2022)