Thursday, November 15, 2018


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To hear President Donald Trump tell it, the U.S. economy is experiencing an economic boom unlike any period in its history under his leadership.

“Nobody has ever been president that has the greatest economy in the history of our country,” Trump told reporters at the White House Thursday. “This is the greatest economy in the history of our country.”

Trump touted the latest sign of economic strength in Friday’s employment report, which showed a net gain of 250,000 new jobs in October, and wage gains of 3.1 percent from a year ago. That boost in wages was the best since April 2009, when the U.S. was emerging from the Great Recession.

By any measure, those are good numbers. However, they’re hardly the “greatest” in U.S. history.

A better way to compare Trump’s record is to compare the overall gains in the economy since he took office with those of his predecessors, during the same period in their presidencies. When viewed in that light, Trump’s record on most of those measures is decidedly average. Below are four data points that suggest Trump’s claims just don’t add up.

Jobs

Trump recently claimed that there are “more people working than at any time in the history of our country.” That’s true, largely because the population is larger than it’s ever been.

Trump also claims the unemployment rate is the best “in the history of our country.” That’s mostly true.

While the rate was slightly lower in the early 50s and again in the late 60s, the current 3.7 percent jobless rate is very low by historical standards. But it’s been steadily falling for the last 8 years, and was already relatively low when Trump took office, having recovered from the peaks of the Great Recession.

Trump also touts his record creating “millions” of new jobs. Since he took office in January, 2017, the U.S. economy has added an estimated 4.1 million jobs in the first 22 months of his presidency.

That’s certainly a lot of jobs. But in the last 22 months of Obama’s presidency, the economy added 4.8 million. By that math, job creation has actually slowed slightly under the Trump administration.

Another way to measure job creation is the overall change in the number of non farm payrolls on a percentage basis. Since Trump took office, the number of non-farm jobs has risen by a little more than 2 percent. That puts the Trump administration squarely in the middle of the pack, when compared with the percentage job growth during the first 22 months of past presidents.

Chart showing how Trump's economy stacks up against his predecessors

John Schoen
Chart showing how Trump's economy stacks up against his predecessors

Gross domestic product

Job gains are a useful benchmark, but the “official” measure of the U.S. economy is the gross domestic product (GDP), usually reported in “real” terms, after adjusting for inflation. The GDP figure measures the value of everything the U.S. produces, in goods and services, reported every three months at an annual rate.

That quarterly number is a snapshot of how fast the economy would grow, if that pace of the latest three months kept up for a year. That pace hit 4.2 percent in the second quarter, unusually rapid by current standards.

But the annual rate of growth has since slowed to 3.5 percent in the third quarter, and the Atlanta Fed expects it to slow to a 3 percent annual pace for the last three months of the year. In 2017, which was Trump’s first full year in office, GDP was up by just 2.3 percent — about where it’s been since the recovery from the Great Recession began in 2010.

Another way to compare Trump’s performance on the economy with past presidents is to look at how the overall economy grew on percentage basis during the first 22 months of each presidency. Once again, the growth of Trump’s economy has been very average.

Wages

Jobs numbers and GDP growth rates are useful for economists and policy makers, but most people gauge the shape of the economy by the health their own personal finances. That’s why wage gains may be the most important measure for voters going to the polls on Tuesday.

After a long period of stagnation under Obama, wages have begun to pick up. That may continue if the economy continues adding new jobs and employers have to boost wages to find and keep skilled workers. But the latest wages gains are less impressive than those seen during the economies of the 60s and 70s, when worker productivity was advancing at a faster clip.

Here again, the wage gains in the first two years of Trump’s presidency are in the middle when compared with the first two years of U.S. presidents, dating back to the Kennedy administration.

Stock Prices

Trump’s tax cuts and increased defense spending gave the stock market a nice boost, but a recent correction has erased a big chunk of those gains. It remains to be seen whether stock prices will recover and begin to reach new highs, especially with several major headwinds blowing.

Those include the Federal Reserve’s ongoing move to nudge interest rates higher, and the widening impact of the Trump administration’s trade dispute with China.

The Trump administration and Republican Congress are betting that tax cuts and higher government spending will win over voters on Tuesday – and again in 2020, when the president is expected to campaign for reelection. But all economic expansions eventually come to an end.

After nearly a decade, there are a few signs that growth may be stalling. Capital investment has weakened recently, despite corporate tax cuts designed to give companies more money to invest in plant and equipment. Home prices have softened for several months running.

So even if growth continues to grow at its current pace for the next few years, it would still fall short of being “the greatest economy in the history of our country.”

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