Analysts say most growth part of Obama’s economy
WASHINGTON— President Donald Trump relentlessly congratulates himself for the healthy state of the U.S. economy, with its steady growth, low unemployment, busier factories and confident consumers.
But in the year since Trump’s inauguration, most analysts tend to agree on this: The economy remains essentially the same sturdy one he inherited from Barack Obama.
Growth has picked up, but it’s not yet clear if it can sustain a faster expansion. Hiring and wage growth actually slowed slightly from Obama’s last year in office. Consumers and businesses are much more optimistic, but their spending has yet to move meaningfully higher.
“I don’t see any noticeable break over the past year,” said Michael Strain, an economist at the conservative American Enterprise Institute. “We tend to overstate the degree to which the president has the ability to control the economy.”
The U.S. public appears to have a similar view, according to a Quinnipiac University poll last week. It found that two-thirds of American voters say the economy is “excellent” or “good,” the highest since the poll started asking about the economy in 2001.
Yet 49 percent of respondents credited Obama for the economy’s health, compared with 40 percent who credited Trump.
Trump’s successful push for income and corporate tax cuts and his steps to loosen regulations have helped drive a surging stock market rally fueled by the prospect of higher corporate profits. And most economists are optimistic that growth will continue at a solid pace this year.
“We have created more than 2 million new jobs since the election,” Trump said last week in Nashville, Tenn. “Economic growth has surged past 3 percent, something that wasn’t supposed to happen for a long time. We’re way ahead of schedule. Unemployment is at a 17-year low.”
Those trends aren’t very different from what came before. Employers added more jobs in Obama’s last year in office—2.2 million in 2016—and nearly 3 million in 2014. Economic growth did top 3 percent at an annual rate during the second and third quarters of 2017. But it had surged above 4 percent in the second and third quarters of 2014.
The unemployment rate fell from 4.8 percent when Trump took office to 4.1 percent now. It fell by the same amount or more in 2013, 2014 and 2015.
During the presidential campaign, Trump portrayed the economy as floundering and called the unemployment rate “one of the biggest hoaxes in modern politics.” Now he accepts the government’s data at face value.
When the government reports growth for the October-December quarter next week, it may show the economy expanded at a 3 percent or higher annual rate for the third straight quarter. That could lift growth in 2017 to the fastest pace since it reached 2.9 percent in 2015.
Some of that growth may reflect greater spending by consumers or businesses in anticipation of tax cuts. But most economists expect it will take time for Trump’s deregulatory and tax policies to have their full effect.
There’s no question that businesses and consumers are more optimistic. The Conference Board’s consumer confidence index jumped to a 17-year high in November before slipping a bit last month.
That hasn’t yet resulted in more Americans opening their wallets, though. Spending growth in the first nine months of 2017 was slightly slower than in the previous year.