A president’s actions can play a role in influencing inflation. However, because inflation is a complex phenomenon driven by a range of factors, the relationship between policies and prices is not always straightforward.
Inflation is generally among the top concerns for consumers, as it makes everyday expenses such as gas, groceries, and utilities more expensive. As prices increase, purchasing power decreases meaning consumers get less for more money.
Let's explore how inflation has fluctuated throughout different presidential administrations.
Key Takeaways
- Inflation is generally among the top concerns for consumers, as it makes everyday expenses such as gas, groceries, and utilities more expensive.
- A president’s actions in office—such as tax cuts, wars, and government aid—can affect prices and the economy overall.
- The president plays a significant role in deciding how to respond to high inflation or stimulate the economy during a slowdown.
When inflation is high, the Federal Reserve uses monetary policy to slow the economy down by increasing the federal funds rate, influencing interest rates, and making borrowing money more expensive for consumers and businesses. The Federal Reserve has a target annual inflation rate of 2%, and it uses monetary policy to keep inflation in check and to stabilize the economy when inflation rises above that benchmark. The Fed, economists, and governments closely monitor the inflation rate to determine if any action needs to be taken to stabilize the economy.
But whose fault is it when inflation rises too high or falls too low? How much control does the president have over inflation, and how have the actions of presidents impacted the inflation rate over the years? The answers depend on the specific economic circ*mstances and challenges of any period in time. However, the president can be important in determining how the country responds to a changing economy and fluctuating prices.
Inflation has also historically been used by presidents and their administrations as a focal point during elections and is generally among the top concerns of voters. Below are the average year-over-year rates of inflation sorted by president, with a brief overview of events and economic conditions that contributed to the numbers.
The average year-over-year inflation rate was calculated by using the Seasonally Adjusted Consumer Price Index (CPI) for All Items and taking the average year-over-year changes for the duration of each president’s term. Due to data availability, the list begins with the presidency of Dwight D. Eisenhower.
Dwight D. Eisenhower (1953–1961)
Average YOY Inflation Rate: 1.4%
The average yearly inflation rate under President Dwight D. Eisenhower was 1.4%. Eisenhower ended the Korean War and had three recessions during his two terms in office. While inflation remained relatively stable and low through the 1950s, curbing inflation was a priority for the Eisenhower administration, and there was still an overall fear of inflation among Americans in the wake of the Korean War.
Eisenhower’s administration did not act to stimulate the economy during these times to keep postwar inflation at bay. Eisenhower wanted economic growth without inflation and stuck to contractionary fiscal policies, as he believed that having a budget surplus was the way to maintain low inflation.
John F. Kennedy (1961–1963)
Average YOY Inflation Rate: 1.1%
The average yearly inflation rate under President John F. Kennedy was 1.1%. Inflation remained relatively low from the end of the 1950s into the mid-1960s, a period known for overall price stability. Kennedy’s administration helped end the 1960 recession by increasing spending and proposing tax cuts to stimulate the economy.
Lyndon B. Johnson (1963–1969)
Average YOY Inflation Rate: 2.6%
The average yearly inflation rate under President Lyndon B. Johnson was 2.6%. Sworn in just two hours after Kennedy’s assassination in November 1963, Johnson signed tax cuts proposed by Kennedy into law.
While the Johnson administration’s expansionary measures boosted jobs and businesses, inflation ticked back up in the mid-’60s. Inflation rose to an annual average of 4.5% in 1966 and hit an 18-year high of 5.75% in 1969.
Richard Nixon (1969–1974)
Average YOY Inflation Rate: 5.7%
The average yearly inflation rate under President Richard Nixon was 5.7%. Inflation rose higher by the end of the 1960s after nearly two decades of relative price stability. While Nixon aimed to cool inflation without causing a recession, the Nixon administration’s economic policies led to a decade of stagflation resulting from economic contraction and double-digit inflation.
The value of the dollar also fell during Nixon’s presidency. The aftereffects of Nixon’s economic policies are known as the Nixon Shock. Inflation under Nixon is the third-highest out of the presidents on this list.
Gerald Ford (1974–1977)
Average YOY Inflation Rate: 8.0%
The average yearly inflation rate under President Gerald Ford was 8.0%—the second-highest on this list. The Ford administration inherited stagflation from Nixon’s time, cut taxes, and reduced regulation to stabilize the economy. While these policies ended the recession, inflation continued to soar.
Jimmy Carter (1977–1981)
Average YOY Inflation Rate: 9.9%
The average yearly inflation rate under President Jimmy Carter was 9.9%, the highest inflation rate among U.S. presidents so far. Stagflation continued from the Nixon and Ford years and was exacerbated by an energy crisis that led to skyrocketing gas prices and shortages. While higher energy prices fueled inflation, core inflation (excluding volatile food and energy prices) remained high through the 1970s.
During Carter’s term, the misery index—which is the unemployment rate plus inflation—reached a record high of 21.98%. The Carter administration’s methods to cool inflation by reducing the budget deficit and deregulation to increase competition and limit price increases were thwarted by a surge of energy inflation in 1979, which pushed inflation over 13% by the end of 1979.
Ronald Reagan (1981–1989)
Average YOY Inflation Rate: 4.6%
The average yearly inflation rate under President Ronald Reagan was 4.6%. To combat the soaring and stubborn inflation of the previous decade, the Federal Reserve increased the fed funds rate to 20%.
The Reagan administration’s response to the persistent stagflation was to introduce economic policies that called for widespread tax cuts, more military spending, decreased social spending, and deregulation of domestic markets. These policies, known as Reaganomics, helped bring inflation down, but critics of the policies claim they added to the national debt and deficit levels and widened the wealth gap.
George H.W. Bush (1989–1993)
Average YOY Inflation Rate: 4.3%
The average yearly inflation rate under President George H.W. Bush was 4.3%. Inflation ticked up briefly from 1989 to 1991 as gas prices increased at the start of the first Gulf War. The Bush administration also faced a recession caused by the , which lasted from 1990 to 1991.
Bill Clinton (1993–2001)
Average YOY Inflation Rate: 2.6%
The average yearly inflation rate under President Bill Clinton was 2.6%. Clinton faced no recessions or major wars during his two terms in office. Inflation also remained relatively low during this time.
The Clinton administration and policies, known as Clintonomics, lowered the U.S. national debt and created a budget surplus of over $236 billion by fiscal year 2000.
George W. Bush (2001–2009)
Average YOY Inflation Rate: 2.8%
The average yearly inflation rate under President George W. Bush was 2.8%. Bush faced the 2008 Great Recession, considered the most significant economic downturn since the 1930s Great Depression. Inflation fell to 0.1% in December 2008 and dipped to negative levels (deflation, or negative inflation) until late 2009.
The Bush administration sent out tax rebate checks to provide relief from the Great Recession. Bush also faced the 9/11 terrorist attacks (2001) and Hurricane Katrina (2005).
Barack Obama (2009–2017)
Average YOY Inflation Rate: 1.4%
The average yearly inflation rate under President Barack Obama was 1.4%. Inflation remained relatively low during Obama’s two terms in office.
Having inherited the economy during the Great Recession, Obama introduced the American Recovery and Reinvestment Act (AARA), passed by Congress, and included $831 billion in government spending to end the Great Recession. The move, part of what’s now known as Obamanomics, was controversial at the time, with its role in ending the 2008 financial crisis still debated today.
Donald Trump (2017–2021)
Average YOY Inflation Rate: 1.9%
The average yearly inflation rate under President Donald Trump was 1.9%. Inflation remained low during Trump’s presidency.
When the COVID-19 pandemic hit in 2020, bringing a brief but severe recession along with it, the Trump administration declared a state of emergency and passed stimulus measures such as the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act in an attempt to provide relief to individuals and businesses.The economic policies followed by the Trump administration are now known as Trumponomics.
Joe Biden (2021–)
Average YOY Inflation Rate: 5.7%*
The average yearly inflation rate under President Joe Biden so far is 5.7%. Biden signed the American Rescue Plan Act in 2021, a $1.9 trillion stimulus package to help the country recover from COVID-19. In the wake of the COVID-19 pandemic recovery and after the Russian invasion of Ukraine in 2022 caused gas prices to soar, inflation rose to record levels not seen since the 1980s. Inflation peaked at 9.1% year-over-year in June 2022, the highest increase in 40 years.
The Fed responded by raising interest rates 11 times since March 2022 in an attempt to cool the stubborn inflation. While inflation did come down from its 2022 peak in 2023, it still remains above the Fed’s 2% target. Biden's economic policies are now referred to as Bidenomics.
*The average yearly inflation rate for the Biden administration was calculated for the years 2021 to 2023, since Biden’s term is still ongoing.
Which President Had the Highest Average Inflation Rate?
President Jimmy Carter had the highest average inflation rate so far, with an average year-over-year inflation rate of 9.9% during his term in office from 1977 to 1981.
How Does the President Affect Inflation?
While the president has historically been the one to blame in times of high inflation and economic downturn in general, it is difficult to gauge how much control the president has over inflation. Still, the president plays a significant role in deciding how to respond to high inflation or stimulate the economy during a slowdown.
What Is the Highest Inflation Has Ever Been?
In the United States, inflation is commonly measured by the Consumer Price Index (CPI). Since the CPI was introduced as an economic indicator, the highest rate of year-to-year inflation the U.S. has seen was 17.8% in 1917.
The Bottom Line
While a president's actions can affect inflation, there are many other factors that must be weighed when evaluating the root causes behind price increases.
The president does influence fiscal policy, and each president’s economic policies—such as tax cuts, military spending, and government aid—certainly do affect the economy. However, many external factors outside a president's control—such as war, economic downturn, and public health crises—also contribute to inflation.
