Trump and Obama right about economy

Good things are happening in the US economy. The unemployment rate in August was only 3.9% , and the inflation rate is hovering at or near the Federal Reserve’s target of 2%.

The latest Census Bureau data show that median household income was about $61,400 in 2017, meaning middle-class incomes have roughly returned to pre-Great Recession levels. The poverty rate fell from 12.7% in 2016 to 12.3% in 2017. Surveys of both business and consumer sentiment indicate that “animal spirits” are robust.

Any president would be inclined to boast about this much good news on his or her watch. Characteristically, President Donald Trump overboasted, falsely claiming in a tweet on September 10 that the most recent quarterly rate of economic growth, 4.2%, exceeded the unemployment rate “for the first time in over 100 years!”

His predecessor, Barack Obama, staked his own claim: “When you hear how great the economy is doing right now, let’s just remember when this recovery started.”

Each has a point. The growing economy represents the acceleration of a trend that began in Obama’s first presidential term, when he was trying to pull the country out of an epic recession (with an assist from a bailout fund that president George W Bush pushed through Congress in late 2008).

Trump, therefore, inherited a tightening labour market, good for workers. However, it stands to reason that the enormous new tax cuts and spending increases he signed into law reheated the already warmed-up economy. So give Trump that much credit.

The Federal Reserve’s policies probably deserve more credit for the recovery than politicians of either party. Yet Trump has recently bashed the Fed for raising rates, a challenge to the central bank’s independence, which, if the president pursues it, could turn into an historic mistake.