Trump could not control the U.S. economy
The U.S. economy is struggling as we mark the end of the fourth and final year of President Donald Trump’s term, and he has sustained little of what he promised on the campaign trail.
Four years ago, I began writing annual assessments of how well the president fulfilled his economic promises. But all he’s done is prove that no matter who is president, the occupant of the White House is largely powerless when it comes to managing free markets.
Perhaps more than any president before him, Trump swore he could deliver astronomical
President Donald Trump can’t claim he left the U.S. economy better than he found it. growth rates in gross domestic product, unprecedentedly low rates of unemployment and a return to an American industrial economy that only ever existed in his imagination.
Last year, Trump had plenty to crow about. The unemployment rate was extremely low and labor force participation rate was historically high. The economy was humming along respectably, if short of Trump’s promised growth rates, which were mathematically impossible.
Then the new coronavirus reached American shores.
The national shutdown. The sheltering-in-place. More than 20 million people lost their jobs and economic activity skidded. While we may debate how Trump responded, no one can blame him for COVID-19’s spread.
Based on the benchmarks Trump set for himself four years ago, the nation bids him farewell far worse off than when he took office. The economy shed 9.4 million jobs last year, many of which take years to recover.
Unemployment rose in December to 6.7 percent, two percentage points higher than last year as COVID-19 cases surged, according to the Labor Department.
More than 4 million Americans have stopped looking for work, according to the latest labor force participation rate.
Many of those who have dropped out are remaining at home to care for children or elderly relatives due to the pandemic. While some will eventually look for jobs outside the home again once a vaccine is available, many will struggle because competition for available jobs will be fierce after mass layoffs.
Unemployed people cut back on their spending, which hurts
economic growth. Analysts estimate the U.S. gross domestic product — a broad measure of economic activity that tracks the nation’s output of goods and services — to shrink by 4 percent in 2020, once all the numbers are in.
That compares with Trump’s promise of 6 percent growth when he took office.
Trump also promised to renegotiate trade deals, get tough on our foreign competition and eliminate the trade deficit. He kept the first two promises but failed miserably on the third.
The U.S. Mexico Canada Agreement, a slight update to NAFTA, will go down as Trump’s signature achievement. He convinced Mexico to improve labor and environmental laws and got Canada to expand its markets,
both big improvements. But he m ade little progress on other trade agreements.
The U.S. trade deficit, meanwhile, has grown dramatically over the last year and set a record for the Trump presidency at $68.1 billion in November 2020, according to the federal Bureau of Economic Analysis. Trump’s tariffs did not boost exports, but it did tax the American people.
Republicans like to brag about Trump’s 2017 tax cuts, but for most American families, whatever cash they saved on income taxes ended up paying Trump’s tariffs on foreign goods they purchased, according to the Tax Policy Center. But that was before COVID-19.
Since then, the tax cuts and tariffs have only exacerbated the Coronavirus Recession. The tax cuts were already running up a $1 trillion-a-year federal budget deficit, making the government’s emergency spending an even greater burden on future generations who will have to pay the national debt.
Conservative economists insisted that by putting more money into the economy, the tax cuts would boost corporate investment and lead to higher wages. But the coronavirus forced a change in plans. Most companies used their extra cash to pay dividends and buy back stocks instead.
The tariffs, meanwhile, made foreign made goods more expensive for consumers. The result was a horrible year for low- and middle-income Americans and a skyrocketing stock market that benefited the wealthy.
Honestly, though, Trump was following an incumbent president’s playbook by stoking the economy to win re-election. He had no idea COVID was coming. That’s why most economists agree presidents have little influence over America’s diversified, globalized and rather freewheeling economy.
Four years after he took power, Trump can no longer claim he left the American economy better than he found it. But neither should we pile all the blame on him. No one should want an economy that a president could so easily influence, because odds are, they would mess it up.