On the campaign trail, President Trump liked to boast, “We built the greatest economy in the history of the world.”
The truth, of course, wouldn’t have been as compelling: “We inherited a solid economy and juiced it with a giant tax cut — until the coronavirus.”
Trump ran mostly on his record rather than future plans, and the country’s financial well-being was at the top of his “Promises Kept” list. How much credit voters give him for his handling of the economy — and how much they hold him responsible for the pain caused by the pandemic — will start to become clear after the polls close Tuesday and results are released.
With so many statistics on the economy readily available, you’d think an assessment of Trump’s performance would be straightforward. But nothing is simple these days. People more knowledgeable than I can pick and choose among the data to support opposing assertions: that the president created an unprecedented rising tide that lifted all boats vs. he simply surfed a wave whose momentum built throughout Barack Obama’s second term.
Based on most measures, the economy is worse off now than it was when Trump took office in January 2017, as the accompanying chart shows.
But it’s a different picture if we put aside what’s happened since COVID-19 hit the economy in March. Trump didn’t trigger the pandemic, or the massive layoffs it has caused. And though he botched the response, it’s impossible to know what would have happened if Joe Biden or anyone else had been president instead.
A comparison of Trump’s term through February with Obama’s second term (when the aftershocks from the Great Recession had faded) shows the country performed modestly better under Trump on some benchmarks and somewhat worse on others. In the president’s plus column:
- Gross domestic product — the country’s output of all goods and services — rose an annualized average of 2.4 percent each quarter during Obama’s second four years, compared with 2.5 percent for Trump through the final quarter of 2019.
- The steady decline in the unemployment rate under Obama (from 8 percent in January 2013 to 4.5 percent four years later) continued during Trump’s term, reaching its lowest level in 50 years.
- Growth in median household income increased to 3 percent under Trump from 2.6 percent under Obama.
To grossly simplify, the economy benefited from two main drivers: the $1.6 trillion GOP tax cut, which largely went to corporations and the wealthy, but also helped out middle-class earners, and the Federal Reserve’s decision to stop raising interest rates and eventually reverse course. Those factors also helped push the Trump stock market up 55 percent through Monday, which — despite all his bragging — isn’t a blowout compared with the 50 percent gain during Obama’s final four years.
Meanwhile, in the negative column:
- Employers slowed hiring over the course of Trump’s pre-pandemic term, though it remained at healthy levels.
- The twin deficits — for trade and the federal budget — got larger under Trump. American exports were hurt by the president’s tariff wars, primarily the one with China. The government sank into deeper red ink due to the 2017 tax cut and increases in spending on the military.
A president’s influence over the economy is limited: Priorities can be promoted — on taxes, spending, regulation, etc. . . . But without a supportive Congress, it’s difficult to turn proposals into law.
There is no doubt Trump will loom large in the history books. But it won’t be for his muddled economic record.