Trump, Obama tussle for credit on economy
What happened
President Trump made the case this week that he deserves sole credit for the strong state of the economy, after former President Barack Obama argued that the “economic miracle” had in fact started on his watch. In a speech launching his midterm campaign blitz (see Talking Points), Obama said he was amused to hear Republicans talk about “how great the economy’s doing right now,” because the monthly new jobs numbers “are the same as they were in 2015 and 2016.” Trump quickly responded, accusing his predecessor of “trying to take credit for this incredible thing that’s happening,” and dispatching Kevin Hassett—chairman of the Council of Economic Advisers—to make his case in a White House press briefing. Hassett said the current strength of the economy was not “just a continuation of recent trends,” but that “a whole bunch of data items”—including business optimism and investment—had surged as soon as Trump was elected. Hassett did concede Trump made a mistake when he tweeted, “The GDP Rate (4.2%) is higher than the Unemployment Rate (3.9%) for the first time in over 100 years!” The correct number is 10 years.
New data showed the economic recovery continuing to power ahead. Worker payrolls expanded by 201,000 in August, according to the Department of Labor—the 95th consecutive month of job growth—and hourly wages went up by 2.9 percent. Blue-collar jobs are also expanding at their fastest rate since 1984, with the mining, construction, and manufacturing industries growing at 3.3 percent in the year up to July. Service sector job growth has remained at around 1.3 percent over the past year.
What the editorials said
The numbers don’t lie, said The Wall Street Journal. By taking an ax to taxes and regulation, Trump has freed up valuable business capital, which firms are using to reward workers. “Economists who presided over the historically slow wage growth of the Obama years” argue that this “is no big deal” because inflation is rising at the same rate as hourly wages. But when bonuses and employee benefits are added to the equation, post-tax wages have climbed an impressive 1.4 percent in real terms over the past year. That is a big deal. There’s another number you should consider, said the St. Louis Post-Dispatch: $890 billion. That is the projected federal deficit for the year ending Sept. 30, “a level not seen since the Great Recession.” Trump blew “a massive hole” in the budget with his $1.5 trillion tax cut and by signing a monster $1.3 trillion spending bill. For the sake of some short-term growth, the president has burdened generations of Americans with a massive debt.
What the columnists said
It pains me to admit it as a liberal, said Matthew Yglesias in Vox.com, but Trump deserves some credit for the economic boom. As late as 2016, progressives were arguing that the economy was still suffering from the recession and “would benefit from additional fiscal stimulus.” Well, Trump did just that. Of course, I’d rather he’d spent trillions of dollars addressing real social needs—clean energy initiatives, free preschool—instead of a tax cut for rich people. But the past 20 months are proof that “fiscal stimulus when the labor market is short of full employment works.”
The people benefiting most from this economic surge are the bluecollar workers in rural areas who were forgotten under Obama, said Rich Lowry in NationalReview.com. Mining and logging employment increased 9 percent in Trump’s first 18 months, after dropping nearly 14 percent in Obama’s last 18 months. Manufacturing employment climbed 2 percent in the first 18 months of Trump, but was flat the last 18 months under Obama. Thanks to Trump’s pro-growth tax and deregulatory program, “the economic recovery is really beginning to reach into Trump country.”
Presidents get too much credit and too much blame for the economy, said Michael Strain in Bloomberg.com. “Powerful global forces,” such as advances in technology, or turmoil between nations, have far more impact on the economy than any one president’s policies. Trump’s short-term stimulus and tax reform should increase investment, but his trade wars, attacks on international institutions and immigration, and “comfort with crony capitalism” could all leave lasting damage. My final words on how we should judge the Trump economy? “It’s still too early.”