Trump’s claim for credit is just fake news
The US economy is recovering with jobless numbers at a 16-year low, but it’s no thanks to the president, discovers David Millward
The broadcast had the air of Soviet television announcing record tractor production figures. Kayleigh Mcenany, a conservative commentator frequently seen on CNN, was reincarnated as a newscaster presenting the administration’s triumphs of the past week.
Billed as “the news of the week” coming from Trump Tower in New York, Mcenany rattled off the figures which the president’s supporters say are being ignored by the much derided mainstream media.
“President Trump has created more than 1 million new jobs,” she said, hailing the low unemployment rate, high consumer confidence and surging stock market.
She concluded: “President Trump has clearly steered the economy back in the right direction.”
The broadcast was widely mocked as was one the previous week hosted by the president’s daughter-in-law, Lara Trump. The president’s poll numbers may be disastrous, but there is little doubt that the economic numbers are looking remarkably good.
Unemployment, which stood at 4.8pc when Donald Trump entered the White House, has fallen to 4.3pc, according to figures produced by the Bureau of Labour Statistics – a 16-year low.
In 2016, they also fell, but by only 0.2pc over the 12 month period. The property market is looking healthy, with the value of an average home 6.5pc higher than a year ago. Official figures show that the economy is growing, with GDP expanding by 2.6pc in the second quarter, in line with market expectations – much of it due to strong consumer spending.
There are also signs that it is Trump’s blue collar base which is reaping the benefits.
At the beginning of the month, the Glassdoor jobs site crunched some numbers and the figures are illuminating. Building workers are earning on average 3.7pc more than they did a year ago, restaurant cooks are 5.8pc better off, delivery and truck drivers 4.3pc. Baristas have seen their pay go up by an astonishing 6.4pc.
On the other hand, average pay rates for white collar jobs have been falling.
“Some of this weakness in pay growth can be attributed to automation, which is beginning to affect jobs that pay right around the median wage in the US, which are typical middle-class wages,” said Andrew Chamberlain, Glassdoor’s chief economist.
“For example, loan officers are not as in demand when consumers can apply for and complete a loan instantly online, and the office manager role changes when businesses utilise software and self-service kiosks for their employees and visitors,” he added.
During the campaign, Trump promised to make America great again, in part by reinvigorating its manufacturing base. of lay offs, often with the same jobs being outsourced overseas to countries with lower labour costs, fuelled the working class anger which propelled Trump into the White House. Since taking office he has frequently turned to Twitter to highlight major investments in the US from blue-chip companies such as Ford, GM and Lockheed. Ford, for example, was singled out during the election campaign, especially when it announced plans to spend $2.5bn (£1.9bn) building two new plants in Mexico and expanding a third. The plans were scrapped and Trump, who had threatened to slap a 35pc import tax on Ford, claimed credit for the change of heart.
Mark Fields, who was Ford’s chief executive, diplomatically praised Trump’s pledge to cut business taxes but later explained the move was due to a change in strategy with the company – like many other manufacturers – planning to step up production of electric cars.
Ford is in many ways a vignette of what has been happening in the United States, with Trump claiming credit for economic good news which most experts argue has had more to do with longer-term trends than with the new incumbent of the Oval Office.
Jeremy Lawson, Standard Life’s chief economist, warned against exaggerating how well the American economy was doing.
“I would say it is recovering a bit above average trends, but it is not booming,” he said.
Much of the recovery has been due to external factors, such as China’s own stimulus package last year.
“It started well before the election. Clearly, the president would like to take credit for improvements which were taking place anyway,” he added. His views are shared by most economic experts.
“US economic expansion is proceeding very much on the same trend path that it had been following under Obama – both in the sense that the economic statistics are the same and in the sense that Trump has not yet implemented much in the way of policies which would affect the economy,” said Jeffrey Frankel, a professor at Harvard, who worked for both the Clinton and Reagan administrations.
“There have been some surprises, such as the strength of the stock market, where shares fell when Trump won the White House.
“It is striking how strong the stock market has been, given how it reacted on election night. Perhaps it is a measure of business confidence.” Michelle Meyer, head of US economics at Bank of America Merrill Lynch, argued that the US recovery was part of a broader trend: “In my view, there are a few factors influencing the growth data this year. First, since the beginning of the year global growth has been looking stronger. “Second, oil prices have stabilised, which is helping boost investment in oil related industries. “Finally, financial conditions have eased. This includes the weakening of the dollar, which has helped trade competitiveness. But there is little evidence that the economy is changdecades ing because of developments in Washington.
“Businesses have seemingly adopted a policy of wait and see given that there isn’t much clarity about what is coming.”
In April the Trump administration unveiled its tax strategy with sweeping cuts for businesses and those on high incomes.
Presented by treasury secretary Steven Mnuchin and Gary Cohn, the director of Trump’s National Economic Council, the plans were at best sketchy. The proposals would reduce corporate income tax from 35pc to 15pc. In fact, few companies pay the top rate, but the strategy sent a signal to the corporate sector.
To the fury of environmentalists, Trump also has pledged to sweep away many regulations imposed by previous administrations, arguing that they have held back the economic growth
‘There’s little evidence that the economy is changing because of what is occurring in Washington’
‘Clearly, the president would like to take credit for events which were taking place anyway’