Middle-class Americans were better off, generally speaking, during President Donald Trump’s first term, depending upon which metrics one uses. Will the middle class be wealthier four years from now?
Find Out: Here’s What Could Happen to Your Money in Trump’s First 40 Days in Office
Try This: How Middle-Class Earners Are Quietly Becoming Millionaires — and How You Can, Too
Here are three policies from Trump’s first term that could influence his ability to help the middle class build wealth.
Was the Middle Class Better Off?
Adjusted for inflation, the median household income grew 8.6% between 2017 and 2019, then declined in 2020 due to the COVID-19 pandemic and recession, said Wayne Winegarden, an economist at the Pacific Research Institute.
“Compared to 2017, median household incomes were 6.3% higher in 2020 when Trump left office,” Winegarden said. “Compared to the historical averages, this is respectable, if not strong growth in median income during a four-year presidential term.”
While Trump introduced policies during his first term that aimed to help the middle class build wealth, the long-term effects remain a topic of debate.
“On net, his policies helped,” Winegarden said. “Specifically, his deregulation efforts and the TCJA (Tax Cuts and Jobs Act) improved the incentives to work, save and invest. These improved incentives helped spur growth, which raised the average family’s income.”
Learn More: Here’s the Minimum Salary Required To Be Considered Upper-Middle Class in 2025
Continued Tax Relief
Trump’s signature 2017 tax code changes aimed to put more money in the pockets of individuals and families. While many of these tax cuts are scheduled to expire this year, the president has advocated for extending and making some of the tax cuts permanent.
“The TCJA of 2017 lowered tax rates for middle-class households, which boosted their take-home pay,” said Christopher Stroup, founder and CEO of Silicon Beach Financial. “It also doubled the standard deduction, which meant lower taxable income for many middle-class households.”
According to an analysis from the U.S. Senate Committee on Finance, middle-class Americans earning between $50,000 and $75,000 saw their average tax liabilities reduced by 13.2% between 2017 and 2018. Households earning between $75,000 and $100,000 experienced a 13.6% decrease in their average federal tax liability during the same period.
“While these changes temporarily increased disposable income, the long-term benefits may be more limited, especially with the tax cuts set to expire,” Stroup said.
Strengthening American Businesses
Trump signed into law the TCJA, which reduced the corporate tax rate from 35% to 21% and aimed to encourage businesses to invest and expand. The law also provided middle-class tax relief to spark consumer spending.
“Trump’s corporate tax cuts and financial deregulation boosted stock market performance, which indirectly benefitted many middle-class investment returns,” Stroup said. “As corporations saw higher profits, stock prices rose, enhancing returns for those invested in the market.”
Stroup explained, “However, these benefits tended to be more significant for wealthier investors, which participate at much higher rates in the stock market than middle-class families.”
Business Deregulation
Tax cuts, deregulation and tariffs comprise the three-legged stool upon which the Trump economy stands.
“Tax reductions and deregulation during Trump’s first term lowered business costs, which encouraged entrepreneurship and small business growth,” Stroup said. “These policies allowed middle-class Americans to invest in their businesses, which can lead to potential wealth creation through business expansion and job generation.”
During his first term, Trump deregulated the energy sector and financial industry and eliminated red tape. Specifically, Trump:
- Lifted restrictions on fossil fuel industries, which led to increased oil and gas production and job creation within the sector
- Raised the asset threshold for banks subject to stringent oversight and potentially enhanced the ability of consumers and businesses to get credit
- Implemented policies that eliminated two existing regulations for every new one introduced.
As a result of the business deregulations, the first Trump administration boasted a national unemployment rate that reached a 50-year low of 3.5% in 2019, supported an estimated 665,000 jobs in the oil, gas and coal sector, and gained 7 million more new jobs overall, the Trump White House and U.S. Department of the Interior reported.
“During Trump’s first term, strong economic growth, job creation and low unemployment led to some wage growth that improved job security for many middle-class workers,” Stroup said. “However, the benefits were uneven, as many still faced stagnant wages and limited wealth-building opportunities due to rising living costs.”
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. For more coverage on this topic, please check out 4 Policies From Trump’s First Term That Hurt the Middle Class’ Ability To Build Wealth.
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This article originally appeared on GOBankingRates.com: 3 Policies From Trump’s First Term That Helped the Middle Class Build Wealth
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