With the Republican convention starting this week, we can expect to hear lots about the terrible economy that Donald Trump inherited and the tremendous job he has done creating jobs and growth. For the most part, the Republican argument will depend on lying about the state of the economy when Trump took office, and on Trump taking credit for what others have done.
No one should be surprised by the last point. Trump brags about how wealthy he is and conveniently fails to mention that his daddy gave him over $400 Million. But that is Donald Trump in a nutshell – born on third base and thought he hit a home run.
With the economy, this delusion takes the form of thinking he did so much better than Barack Obama. But the reality is different. Trump brags about reducing unemployment to 3.5%. That is a good number, but overlooks the fact that Obama inherited an unemployment rate of 8% and brought it down to 4.7% by the time Trump took office. For those who are keeping score, 4.7% is a very low number historically, hardly the disaster that Trump complains about. Even if we give Trump credit for what happened during his first year in office, Obama reduced unemployment by 3.3%, and Trump only reduced it by another 1.2% beyond that.
On Trump’s claims of job creation — whatever happened to the Republican article of faith that government can’t create jobs? — the numbers once again show a superior performance by Obama. During the last three years of the Obama administration, he created jobs at an average rate of 215,000 per month. Trump was only able to achieve a rate of 182,000 per month in his first three years in office. If we take into account 2020, Trump’s overall rate will be significantly lower, plunging into negative territory.
When we look at impact on GDP, once again Obama’s is bigger. Sheer GDP rates don’t measure a president’s performance because growth of 2.5% can be either good or bad depending on whether the previous year’s rate was 2.9% or 1.6%. Presidential performance is better measured by the change in GDP from one year to another, though it might be worth mentioning that Obama had three years of GDP growth at 2.5% or better, including two of his last three years in office, while Trump has had only one such year.
A fair comparison of the impact of a president’s performance requires excluding his first year in office, since the first year’s GDP will be determined by policies enacted during the previous administration. It is only once a President has enacted his agenda that you can fairly say he has had an impact on GDP. So, a fair comparison between Obama and Trump would mean attributing 2009 to Bush and 2017 to Obama. This makes sense because the most significant, if not the only significant, Trump agenda item to impact GDP was his tax cut, which was signed on December 22, 2017 and was not effective until 2018.
Leaving aside 2010, in which Obama got GDP from -2.5% to 2.6%, he still outperformed Trump. His cumulative GDP changes from 2011 through 2017 total .6%. If we include 2010 his overall impact on GDP was 5.7%.
In 2018 Trump’s GDP went up .5%; in 2019 it went down .6% for a cumulative total of -.1%, a net decline. His 2019 rate of 2.3% was no better than the average of Obama’s performances between 2010 and 2016, and nowhere near the 4% Trump bragged he would achieve.
As for Trump’s 2020 GDP, the CBO is estimating a rate of -5.6%, for a decline of 7.9% from 2019, and a cumulative impact on GDP of -8.0%. Even if you give him a mulligan on 2020, Trump’s GDP performance among the last 11 presidents ranks 7th. Would someone please remind me what Trump has to brag about?
The reality is that Trump put the brakes on the Obama recovery. GDP growth declined by .6% in 2019 after Trump declared a disastrous trade war on China. In 2020 employers cut a cumulative 22 million jobs, and the unemployment rate tripled to its highest rate since the Great Depression. Economists argue about whether we are in a severe recession or the early stages of a depression, but there is one thing we can be sure of. At no point during the Republican convention will Donald Trump or any of his followers take any blame for the downturn. They will blame the coronavirus, without acknowledging that there is any connection between the depth of our recession and Trump’s failure to take the virus seriously and to control it, as every other developed nation has done.
When it comes to bragging about the economy, Trump is like a rooster on a dung heap who thinks that his crowing makes the sun rise. But I don’t expect any of his followers to notice that during the raucous festivities this week.
