A Comparison of U.S., Euroland and Japanese Growth and Inflation
September 8, 2026
The promise of the Trump presidency to make America greater hasn’t been fulfilled yet. U.S. real GDP had expanded 2.8% in 2024, the year he was reelected to a non-consecutive second term. In 2024, economic growth had been substantially weaker in both Japan (-0.2%) and Euroland (+0.9%) than in the United States.
U.S. economic growth slowed to 2.1% in 2025 and exactly matched that pace in this year’s first quarter before slowing to a 1.5% annualized pace in the spring quarter. While U.S. growth decelerated last year, growth picked up to 1.1% in Japan and 1.4% in Euroland. Japanese growth last quarter of 1.4% nearly matched the U.S. result, while Euroland’s 2.6% annualized quarter-on-quarter expansion was more than a full percentage point faster than in the United States. Not only has U.S. growth slowed in the first year and a half of Mr. Trump’s second term, but also America’s advantage vis-a-vis Europe’s common currency bloc and Japan have each diminished extensively.
The 2.8% U.S. growth from 2024 that Trump inherited was not a misleading fluke. GDP had climbed by an even higher 2.9% in 2023 and 2.5% in 2022 for a three-year average pace of 2.7%. Year 2021 was intentionally deleted from this analysis because it embodied the huge post-pandemic rebound of economic activity around the world. The average growth rate in the Biden administration’s final three years also surpassed the 2.5% pace in the first three years of Trump’s first term. The last 2.5 years under Trump (2020 plus the 1.5 years of measured growth inf his second term) saw the U.S. economy contract 1.7% per year on average due to the outsized 3.5% plunge during 2020.
What about consumer price inflation? The first Trump presidency inherited a 2.5% consumer price inflation rate in January 2017. Such fell to 1.4% four years later when Biden’s presidency began. While spiking as high as 9.1% in mid-2022, the 12-month rate of increase of 3.0% in January 2025 had reversed most of the spike by the time Biden left office. At 3.4% currently, consumer price inflation has inched somewhat higher instead of returning to the 2.0% target during the year and a half of Trump’s second term. In Euroland, a rise in CPI inflation from 2.5% in January 2025 to 2.9% a year and a half later matched the U.S. increase and thus maintained the euro bloc’s advantage. In Japan’s case, moreover, inflation was halved from 4.0% in January 2025 to 1.9% in July 2026.
Superior economic stats in other economies, other things being equal, would be expected to depress the dollar, and that’s what has happened so far during this second term of Mr. Trump. Compared to levels at the start of the term on January 20, 2025, the dollar has depreciated by by 11.2% against the euro, 1.3% vis-a-vis the yen, and 8.8% on a weighted basis measured by the DXY index.
Copyright 2026, Larry Greenberg. All rights reserved.
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