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 Sunday Telegraph - Money & Business - - Business -

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’

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