The Economy Trump Inherited (With Graphs!)

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There’s a Republican myth about the economy and it generally goes like this: Obama and the Democrats stifled American exceptionalism for eight years. Once Trump got in there, he eliminated all those burdensome regulations and unleashed American capitalism, and job growth and the economy have been incredible ever since!

As most of us know, these claim are garbage. The Great Recession was created by the last Republican administration. The recovery was slowed by a Republican congress who preferred to let the economy struggle then take the chance Obama got credit for anything. And Trump’s trade war puts us on a path that will shake the economy and likely cause massive losses of jobs and wealth over time.

But for conservatives who don’t like Trump’s immaturity and his ambivalence towards hate crimes, but still want an excuse to vote red this year, they cite the economy. They’ll say something to the effect of ‘I wish he’d tweet less, but it’s not worth losing all these great jobs.’

It’s a frustrating argument to have, because the stock market, economy and job growth ARE all doing well. It’s just that they’ve been doing well for nine years, and half the country chooses to ignore the first seven of those. This is why conservatives often point to things like consumer confidence instead of actual results, because it’s basically them saying ‘I feel better about the economy now.’

* * *

In reality every President deserves some credit for the economy, but not all of it. But for whatever difference our political leaders make, the economic expansion of the past two years is about the same as the preceding Obama years.

If President Obama piloted the plane from Denver to Miami, then Trump drove a rental car to Ocean Drive and is now bragging he got us to South Beach all on his own.

When Trump brags about the lowest unemployment rate in history, remember all that means is he hasn’t ruined a trend that started before he hired Bret Michaels.

UI montly rate

 

Despite all the talk of how great job numbers are, the reality is they’re basically unchanged to what Trump inherited.

New Jobs

 

Including 2009 data is technically accurate, although not really representative of the economic cycle Obama created. Here’s the totals post-Great Recession:

New Jobs 2010-2018

 

Yes the unemployment rate has been dropping during Trump’s time in office…just like it had been since summer 2009.

UI quarterly rate

 

The stock market gains were a little more pronounced during the first year of the Trump Administration, and some of that was undoubtedly a spike due to the expectation of tax cuts and loosening regulation…but in 2018 the market is flat year-to-date.

Trump is now claiming this is due to the midterms, but every economic indicator and expert who studies the market says it’s slowing down due to fears of an escalating trade war. As the reality of Trump’s policies set it, investors’ minds have replaced the promise of magic unicorns with the cold realities of slowing growth and unstable leadership.

S&P 500

 

Trump’s tariffs have been in the news for many months (and it feels like we’re aging in dog years during this administration), but those tariffs only went into effect on July 1st. So we’re just now getting the first impacts and real-world results.

There was a lot of crowing about GDP growth topping 4% this summer, and it’s undoubtedly a good result…but Obama topped it four times. And due in part to the effect of tariffs, preliminary numbers show Q3 dropping back to a still good (but topped or equaled six times by Obama) 3.5%.

GDP


Another factor of job growth is it’s supposed to increase wages. The theory goes as more and more people have jobs they’re happy with, employers have to make more lucrative offers to fill open positions. That should lead to an increase in wages…which isn’t happening.

Like most indicators, wages dropped incredibly fast in 2008 and 2009. During Obama’s tenure amid a shaky recovery, they bounced around quite a bit and actually dipped a bit in 2016. So there’s an argument that the remarkably steady wages during Trump’s time are a good thing. But it shows fact there’s nothing remarkable about our economy since January 2017…it’s just kind of chugging along.

Wages

 

To be fair, disappointing real wages (i.e., adjusted for inflation) is not unique to the past two years. In fact they’ve barely moved since the ’60’s.

Buying power

But for someone who regularly claims they’ve accomplished more than any President ever, and has the greatest economy in history and has done so much for Americans’ job prospects…wouldn’t workers be earning more if things were so great?

* * *

Don’t get this twisted: the economy is still strong. But Trump’s rhetoric doesn’t match his results, and any claim this is the greatest economy ever or was suddenly improved with Trump’s victory is patently false.

The tax cuts had minimal effect. Wages didn’t increase and the market had a short-term bump that fizzled quickly.

Tariffs have helped some sectors and hurt others. It’s too soon for truly national data to capture the net effects, but for every steel plant hiring back laid off workers, there’s a soybean farmer whose crops are going unsold. Whether the net result ends up slightly positive or negative, there are better ways to help our economy without this much collateral damage.

What we’re seeing is not some magical unleashing of America’s might that came out of nowhere, but a weak, feckless President coasting on the hard work of those who came before.

 

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