During the 2012 presidential campaign, Republican nominee Mitt Romney made a not-so-bold promise about the stewardship he would provide for the American economy. “I can tell you,” he guaranteed, “after a period of four years, by virtue of the policies we'd put in place, we'd get the unemployment rate down to 6 percent—perhaps a little lower.” Romney’s pledge was greeted with a mixture of yawns and giggles, and with good reason. The overwhelming consensus of economists, including those from the Obama administration, private forecasters, and the nonpartisan Congressional Budget Office (CBO), was already predicting the jobless rate would drop to 6 percent by the end of 2016. As it turned out, President Barack Obama blew past those numbers, leaving office in January 2017 with an unemployment rate of just 4.7 percent.
Now, six years after Mitt Romney tried to take credit in advance for Barack Obama’s upcoming second term, Donald Trump is pretending the Obama economic expansion that began in June 2009 never happened at all. Currently in its 111th month and featuring 97 consecutive months of private sector job creation, the Obama expansion cut unemployment in half, more than doubled the stock market, saved the U.S. auto industry, led to growing gross domestic product and rising consumer confidence, all while slashing annual budget deficits by almost two-thirds. With the exception of the mushrooming national debt on Trump’s watch, almost every trend already underway when he skulked into the White House has continued without interruption. Like Romney four years before, President Trump just needed to show up on Inauguration Day to laissez les bon temps rouler. Instead, Trump has repeatedly suggested history began on Jan. 20, 2017.
That, after all, is the obvious, if unintended, meaning of Trump’s never-ending and never-true boasts that “we have the greatest economy in the history of our country.” The 800-pound donkey is the room is that since World War II, the economy grew faster, more jobs were created, and incomes rose more quickly under many presidents, almost all of them Democrats. When Trump bragged in July that “we’ve accomplished an economic turnaround of historic proportions,” his predecessor Barack Obama felt obligated to administer a healthy dose of the truth. As Obama put it in September:
When you hear how great the economy’s doing right now, let’s just remember when this recovery started. I mean, I’m glad it’s continued, but when you hear about this economic miracle that’s been going on, when the job numbers come out, monthly job numbers, suddenly Republicans are saying it’s a miracle. I have to kind of remind them, actually, those job numbers are the same as they were in 2015 and 2016.
The Washington Post wasn’t the only one dishing out the Pinocchios in response to Donald Trump’s fabrications.
As Forbes explained two weeks ago, in 2017 the economy averaged 182,000 new jobs each month for an annual total of 2.19 million. This year, Trump has presided over 208,000 positions added monthly, a figure which projects to 2.5 million for all of 2018. But as Chuck Jones noted:
To provide a monthly comparison, the average employment gain in Obama’s last six years in office (after getting out of the recession's impact) was 201 thousand. And the average for his last five years was 207 thousand, essentially the same as the 208 thousand for the first nine months this year.
That’s why Trump’s campaign pledge to deliver 25 million over 10 years was so unimpressive. The economy over Obama’s last six years averaged 2.42 million jobs annually. So, barring a recession (a big “if,” to be sure), “It appears that Trump can reach his 25 million job growth goal even if the economy continued to grow at the pace under Obama.”
The same dynamic applies to the unemployment rate as well. The jobless rate at the end of 2008 was 7.3 percent. But with worst of the recession leading to a jaw-dropping 8.9 percent contraction of the economy in the last calendar quarter of 2009, the U.S. shed a staggering 2.2 million jobs in Obama’s first three months in office. But the combined impact of the TARP program, the Obama stimulus, and the auto rescue began to reverse the 9.9 percent peak unemployment rate at the end of 2009. (The CBO was not alone in crediting the Bush and Obama interventions with averting “Great Depression 2.0.”) By the end of 2012, unemployment had been reduced to 7.9 percent. Over the next four years, joblessness fell by 1.2, 1.1, 0.6, and 0.3 points annually. With 0.6 and 0.4 percent declines in 2017 and 2018, those trends have not been interrupted. As Jones concluded, “the U.S. unemployment rate continues on essentially the same path even with a slightly higher GDP growth rate (based on trailing four quarters growth).”
But the unbroken trend of declining unemployment doesn’t tell the whole picture. America’s workforce reached a record 149,750,000 in October 2018. But the number of employed Americans has been growing for over seven years, and very month since May 2014 represented a new record at the time:
By almost every indicator, the labor market under Donald Trump has simply maintained the progress already long underway during the tenure of his predecessor. The four-week average of initial jobless claims was a whopping 600,000 when Barack Obama was first sworn into office. When he left the White House in January 2017, the number has plunged to only 244,000. At beginning of November 2018, the figure continued its downward direction to 213,000. While the U.S. labor force participation rate of 62.3 percent—the percentage of all potential workers currently employed—has not reached its pre-recession high of 67.3 percent last achieved in April 2000, the 82.3 rate among prime age workers (ages 25-54) has been going up steadily since the middle of 2014. (It should be noted that the broader employment-to-population ratio has not reached its previous record set in 2000 due in large part to the aging of the American population.)
For his part, the 45th president of the United States has wrongly proclaimed that the performance of the U.S. economy during his time in the White House hasn’t just outshined that of the 44th, but pretty much every occupant of the Oval Office for generations. As Trump put it in September:
The GDP Rate (4.2%) is higher than the Unemployment Rate (3.9%) for the first time in over 100 years!”
Trump, of course, was wrong. While the economy last hit that milestone in 2006, such figures were routine before the steep recession that began in December 2007. Bill Clinton achieved such numbers many times during his eight-year expansion that added 22 million jobs to the American economy. But when it comes to GDP growth, Trump hasn’t just failed to hit the highs reached by Barack Obama. He’s nowhere near the 1960s growth boom under Democrats John F. Kennedy and Lyndon Johnson. As he put it after 4.2 percent growth rate for the second quarter of 2018, Q3 “could be in the fives.”
Sadly for Donald Trump, the third quarter which ended in September saw 3.5 percent growth. While still a healthy figure, that’s a far cry from Trump’s campaign promise of average annual GDP growth that “we think it could be 5 [percent] or even 6 [percent].” No tenant of the White House has achieved those annual growth numbers since JFK and LBJ did it last. As for the good quarterly numbers in Q2 and Q3, they don’t exceed the best numbers put up by Barack Obama. As Vox put it earlier this year:
There is something odd about suggesting you’ve owned the libs and defied the odds by returning to a growth rate last seen during Obama’s second term. At any rate, the Bureau of Economic Analysis offers this chart, which again makes a strong case that we’re basically seeing an economy similar to that of Obama’s second term.
And so it goes. Consider the encouraging consumer confidence numbers. It’s true that the Conference Board’s index is at an 18-year high. But those figures have been moving steadily upwards since mid-2009:
Part of the reason for that buoyant consumer sentiment is the strong performance of the stock market. Trump was already bragging about the bulls on Wall Street even before he took the oath of office. But as Meg Kelly documented in the Washington Post, Japanese, German, and U.K. markets fared almost as well as the S&P 500 since Jan. 20, 2017. Before that time, when Trump pooh-poohed the U.S. indices as “in a big, fat bubble,” the S&P and the Dow were also smashing records. During Barack Obama’s eight years in office, the Dow mushroomed from 7,949.09 to 19,804.72, a jump of 149 percent. As of Nov. 14, 2018, the Dow sat at 25,080.50, up about 27 percent since Donald J. Trump was sworn in. At the same 22-month mark in Obama’s presidency, the DJIA was up more than 37 percent.
The Trump administration has been bragging about median household income hitting a new record of $61,372 in 2017. But as Seeking Alpha demonstrated, median household income, too, has been consistently trending upward since its post-recession trough of $48,203 in mid-2010. (Measured in constant August 2018 dollars, MMHI is only now slightly higher than its pre-recession record of $61,460 in 2008.) Regardless, the Trump trend is largely the same one in place when Barack Obama walked out of 1600 Pennsylvania Avenue for the last time.
To be sure, Donald Trump was lying when he proclaimed earlier his year that “wages are now, for the first time in many years, rising.” But in his defense, workers’ wages, which grew at 3.1 percent in the third quarter, are rising at a higher rate than was the case throughout most of the Obama presidency. But with increasing inflation, most of those wage gains are being wiped out. Adjusted for inflation, that rosy Q3 number is actually only 0.8 percent, well below the pay raises workers received in 2000 the last time unemployment was this low. As Kevin Drum warned in August:
Think about this. The economy is growing at its fastest rate in years. Unemployment is below 4 percent, its lowest point in years. Corporate profits are breaking records. By any normal measure, this is a very high-pressure economy. And yet blue-collar workers have gotten a pay cut over the past two months. Anyone care to explain that?
One month ago, a Hill/Harris poll found that Americans by a 2-1 margin give Donald Trump credit over Barack Obama for the strong economy. For his part, N. Gregory Mankiw, chairman of President Bush’s Council of Economic Advisers, disagreed, countering “I can say that the economy was in fine shape at the end of the Obama administration, despite what President Trump sometimes asserts.” Austan Goolsbee, who served in the same role for President Obama, put it this way:
“At best, you would say it's been a continuation of a steady trend. I don't see how you come into the game with 10 minutes left in the fourth quarter, your team is already ahead, and you're like, 'I won this game.'”
Obama communications director Jen Psaki was blunter still:
“A buffoon could have kept the recovery going, and in fact one has so far.”
So far, but not necessarily for much longer. It’s not just that time is working against Donald Trump. The Obama expansion, after all, is already one of the longest on record. The strong productivity gains in the second and third quarters are forecast to diminish. Along with the projected slow growth in the size of the aging American labor force, the nonpartisan Congressional Budget Office (CBO) is predicting just 2 percent yearly GDP growth over the decade ahead.
That said, when it comes to continued success at managing the booming U.S. economy bequeathed to him by Barack Obama, Donald Trump’s biggest enemy is Donald Trump.
Trump’s spending spree and $1.5 trillion, 10-year tax cut windfall for the wealthy have, as predicted, juiced the U.S. economy in the short term. But Uncle Sam’s deficits are rapidly growing larger and are projected to hit $1 trillion a year by the end of fiscal year 2019. Worse still, the tax cuts have not fueled the increased business investment its backers promised, but as detractors warned instead unleashed a wave of stock buybacks and mergers and acquisitions which have only ensured the already-rich got richer still. Adding insult to injury, President Trump’s dangerous tariff policies are already disrupting global supply chains, hurting the U.S. agriculture and auto sectors, and risking an international trade war the International Monetary Fund warns will hurt economic growth worldwide next year.
If and when those dark clouds gather over the American economic landscape, Donald Trump won’t be able to blame Barack Obama. After all, in one form or another Trump and his team have spent the past two years bragging the economy “is booming like never before.” And that marks a sharp strategic departure from the last Republican president, George W. Bush. For eight long years, Bush and his allies claimed he “inherited a recession” from Bill Clinton. (According to the NBER, that’s not true: the first Bush recession started in March 2001.) In August 2002, Bush OMB chief Mitch Daniels proclaimed, “He [Bush] inherited that recession from the previous administration. Case is closed.” As late as June 2004, Sean Hannity told Fox News viewers that “we got out of the Clinton-Gore recession.” As the economy cratered in the summer of 2008, the likes of Rush Limbaugh and Lawrence Kudlow blamed the collapse on Barack Obama—a man who had not yet been elected president of the United States. As for Dubya himself, he used his final press conference on Jan. 12, 2009 to blame his predecessor:
"In terms of the economy, look, I inherited a recession, I am ending on a recession. In the meantime there were 52 months of uninterrupted job growth.”
In reality, it was Barack Obama who inherited not merely a recession, but the deepest economic crisis to hit the United States since the Great Depression. Yet in the face of total Republican obstruction and even sabotage of his recovery programs and the “anti-stimulus” of steep spending reductions by state and local governments, Barack Obama saved the American economy and put it on the path to expansion, and still rolling on more than nine years later. Of course, in 2012 Mitt Romney pretended otherwise, and comically claimed Barack Obama “made the economy worse.” On his first day in office, Donald Trump resurrected and doubled-down on Romney’s lie. Trump called the Obama boom “American carnage.”