Give Trump the economic credit he deserves
Watching President Trump crow about the economy calls to mind the fable about the fly perched on the ox’s horn who looks with satisfaction at the fresh furrows behind them and says: “That was easy. Let’s go plow another field.”
At least the fabulous fly was willing to share the accolades. Trump takes them all for himself. Yes, he is presiding over a well-performing economy. But listening to him, one would never know that Barack Obama handed him a healthy economy. Yes, real GDP growth has been somewhat higher in Trump’s six full quarters than in Obama’s last six quarters. But more jobs were created during Obama’s last 19 months than under Trump’s first 19 months.
Hearing Trump talk about the mess he supposedly inherited, one might think he took office during a period of economic turmoil. Actually, the president who had that misfortune was Obama, who was inaugurated in the midst of the Great Recession.
Mind you, that’s not to say Trump can’t claim some credit — though certain caveats apply.
The long-running recovery does seem to have gotten somewhat stronger under him, enough so that it may be about to spark some real wage growth. But it’s also true that Trump has essentially poured a pint of Red Bull down the national gullet in the form of his debt-financed tax cuts. (Those tax cuts are one reason we’re heading back toward trillion dollar annual budget deficits.)
It’s true that economic growth hit 4.2 percent in the second quarter. But as various fact-checkers have noted, in 2014, we had a quarter where growth hit 5.1 percent, and another when it came it at 4.9 percent. In 2011, a quarter clocked in at 4.7 percent.
It’s also true that, at 3.9 percent in August, the unemployment rate is impressive. But again, it’s hardly historic. It was more than a percentage point lower in 1953, and lower overall in 1968, and was about the same in 2000.
Now compare Trump and Obama. When Obama took office, the unemployment rate was 7.8 percent. With the economy shedding jobs each month, it bottomed out at 10 percent in October of 2009. By the time Obama had left office, however, joblessness had dropped to 4.8 percent. Thus it was down three percentage points from the time he took office and 5.2 percentage points from the economy’s recessionary high.
As for Trump, he started with Obama’s ending 4.8 percent rate. After dropping to 3.8 percent, the joblessness rate is now at 3.9 percent. Now, in fairness to Trump, large job gains get harder the closer an economy moves toward full employment. But that limitation also underscores the fact that Trump inherited a pretty good economy.
Let’s turn to the stock market. Although it’s hardly an indicator of the overall health of the economy, it is one this president likes to cite. When Trump took office, the Dow Jones Industrial Average was 18,589.7; it rose to an all-time high of 26,616.71 in January 2018. On Tuesday, it closed at about 25,916. So from the start of his presidency to the (all-time) high, it rose 43 percent. Today, it’s up some 39 percent.
But those who applaud Trump’s increase have to celebrate Obama’s as well. When Obama took office, the Dow was at 7,949.1. It fell to a recessionary low of 6,547 in March 2009, before starting a long upward run, to end at 19,732 on his last full day in office, for a total gain of 148 percent. That run came over eight years, of course. Trump has been in office fewer than two. Still, on a percentage basis, Obama’s first year gains also outpaced Trump’s.
So Trump’s claim that his economic record is unparalleled or extraordinary simply doesn’t withstand scrutiny. Not, that is, unless history began on Inauguration Day 2017.
Our solipsistic president may think so — but economically literate Americans know better.