EVAN HOROWITZ | QUICK STUDY
Andrew Harnik/Associated Press
A good chunk of President Trump’s State of the Union address is likely to focus on America’s high-performing economy, presumably touching on strong gross domestic product growth and an unemployment rate nearing 50-year lows.
Trump himself deserves credit for some of this good economic news — but not all. The nation was approaching full employment before he took office. And there’s a cherry-picking problem, too, since Trump has largely stopped talking about once-central issues with less-rosy numbers, like the yawning trade deficit and rising federal debt.
To help you separate the legitimate from the hype during Tuesday night’s address, here’s a breakdown of the economic issues where Trump himself played a decisive role, and others where his impact is murkier.
In some areas, Trump’s actions have already made a decided difference.
■ Tax cuts. Absent Trump’s leadership, the tax-cut package passed by Republicans last month would have looked wholly different. Not only did Trump provide the finishing signature — something no Democratic president was likely to do — but from the beginning he set the contours for the Republican bill.
Massive corporate tax cuts, lower individual rates, a carve-out for pass-through business, an expanded child tax credit: These were all pillars of his early proposals. Before Trump came to town, Republicans had a whole different plan, involving a border tax that Trump’s team quickly spiked.
■ Surging stocks. This one’s less clear, but Trump can probably take credit for at least some of the run-up in stock prices. Yes, the market was already on an upward swing when Trump took office, but his corporate tax cuts likely provided a late-stage boost, instantly increasing corporate profits and giving shareholders new reason to expect outsize returns.
■ The Trump Fed. No government body has more day-to-day control over the US economy than the Federal Reserve, and Trump has moved quickly to put his stamp on the agency. He has made two appointments — including a new chairman — while watching the Obama-appointed chairwoman and vice chairman depart.
Starting now, every decision to raise or cut interest rates belongs to the Trump Fed.
In other areas, Trump has been the passive beneficiary of preexisting trends. He can fairly claim to have been a good steward, but not to have turned the tide with new policies.
■ Job growth. Heading into 2017, the United States had enjoyed 75 straight months of uninterrupted job growth dating back to 2010, with an average increase of roughly 200,000 jobs per month. Measured against that standard, Trump’s record looks less remarkable, with an average of 167,000 new jobs per month.
■ GDP growth. Over the past three quarters GDP growth has indeed been quite strong, touching 3 percent. But the country saw even faster growth rates across similar spans in 2014 and 2012.
■ Unemployment. Here, too, it’s the same story: Overall unemployment has been going down for years, and it’s still going down under Trump.
The pattern holds for most subgroups too, which is why it’s hard to credit Trump for the consistent, long-term decline in black unemployment, despite claims like the one he made on Twitter during the weekend, when he wrote: “Somebody please inform Jay-Z that because of my policies, Black Unemployment has just been reported to be at the LOWEST RATE EVER RECORDED!”
■ Trickle-down tax cuts. Despite dozens of corporate announcements about year-end bonuses and new facilities — all purportedly due to the Trump tax cuts — it’s not clear this is anything more than PR spin. Wages don’t seem to be rising, and the early data on corporate investment also yields no evidence of improvement.
Also important are the issues you may not spot on your State of the Union bingo card, including some that were once central to Trump’s populist promise.
Like reducing the trade deficit and making more stuff here in America. So far, that doesn’t seem to be happening. The trade deficit actually grew by over 10 percent in 2017, and there’s been no jump in manufacturing jobs.
Or take the federal debt, which Trump promised to eliminate in eight years. That too has increased, and in the coming years it’s expected to grow even faster, as tax cuts add more than $1 trillion in red ink.
Really, though, the big question for the next three — or seven — years of the Trump presidency isn’t whether he can somehow fulfill these slipping promises. It’s about the durability of his current successes.
How long he can maintain the strong economy he was fortunate enough to inherit?
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