CAN TRUMP ECONOMY SAVE GOP?

There is little evidence to suggest that a vibrant economy will save Trump’s party from electoral disaster

THE fate of the Donald Trump presidency may rest on whether his Republican Party (the GOP) maintains control of both chambers of Congress in November’s mid-term elections.

Democrats are in a strong position to capture a majority of seats in the House of Representatives, and have an outside shot at capturing the Senate as well.

Trump is relying on a vibrant economy to bolster Republicans’ bid this fall.

Just how good is the “Trump economy”? There are two problems with Trump’s assertion that he is responsible for the good economic times.

First, the extent to which the economy has improved is exaggerated. Second, Trump is hardly responsible for its current condition.

In the year since Trump assumed the presidency, the American economy has improved in many measurable ways. Unemployment is down (from 4.8 per cent when president Barack Obama left office to 4.1 per cent today.

However, monthly job growth in Obama’s final year in office was 187,000, compared with only 171,000 per month in Trump’s first year), gross domestic growth (GDP) is up (2.3 per cent last year versus 1.5 per cent in 2016), and the stock market has added trillions of dollars in value, though it recently suffered a 10 per cent correction.

Moreover, using the broad measure of the stock market, the Standard and Poor 500, Trump’s first year yielded an increase of 23 per cent while that of Obama’s for the same period increased 36.9 per cent.

Even if one concludes that the economy is sizzling like it has not in decades, the president is only partly responsible, and some of his actions, such as increasing the national debt with a large tax cut and imposing huge tariffs on steel and aluminium, are likely to worsen the country’s long-term economic outlook. And there’s more to ponder.

First, the unemployment rate has been in steady decline since 2009.

Second, the stock market skyrocketed with Obama at the helm, and GDP grew from -3.19 per cent in Obama’s first full quarter to 3.24 per cent in his final full quarter.

Third, the global economic picture has improved tremendously over the last year.

Indeed, GDP growth in Europe and Japan has surpassed that of the US, and many major equities markets in Europe and Asia have outperformed the US share market.

Finally, many financial analysts insist that the nation’s central bank — the Fed — should be credited with the American market’s gains, because of its wildly aggressive quantitative easing under former chairman Janet Yellen.