If his speech is any guide, Trump hasn’t noticed that the U.S. economy is doing well
In his speech before Congress on Tuesday night, the first of his presidency, Donald Trump rattled off a range of statistics aimed at implying that he inherited some sort of god-awful economic mess from Barack Obama. Some of the stats were even accurate, though they were also fairly misleading in a couple instances and at times undersold the strength of the American economy. “Tonight, as I outline the next steps we must take as a country, we must honestly acknowledge the circumstances we inherited,” he said.
Here’s a look at some of Trump’s economic claims:
“94 million Americans are out of the labor force.”
That’s true. But a lot of it has to do with the aging of U.S. baby boomers. Some 54 million of the 94 million who aren’t at work are 55 or older, and a lot less likely to be working. It also includes millions of people who are disabled, in school, or taking care of the household. But it’s also true that a not-insignificant share of people considered to be in their prime working years, say, in the age range of 25-54, aren’t working at the rates we would have expected.
“Over 43 million people are now living in poverty, and over 43 million Americans are on food stamps.”
True and true, but both are declining after spiking sharply during the Great Recession. There were roughly 3.5 million fewer people below the poverty line in 2015 than there were in 2014. Food stamp recipients fell by 900,000, or 2 percent, over the same period.
“More than 1 in 5 people in their prime working years are not working.”
Yes. True. And this is a problem, but it’s not easily fixed. Any number of explanations have been given for the decline in U.S. labor force participation that isn’t driven by retiring baby boomers. Educational failure leading to lack of skills among workers is one. The rise in U.S. incarceration, and criminal records that make it harder to get jobs, is another. (Read more here.)
“We have the worst financial recovery in 65 years.”
It isn’t clear what he’s saying here. It’s true that the economic recovery from the Great Recession was slow. (Recoveries that follow financial crises tend to be.) And it’s true rates of GDP growth are below what they were before the crisis. But what does “financial recovery” mean? Since bottoming out in March 2009, the U.S. stock market is up more than 200 percent. Bank lending has recovered. So has U.S. household finances. Since it’s not clear what Trump is saying, I can’t say if it’s true or not.
“In the last 8 years, the past administration has put on more new debt than nearly all other presidents combined.”
Technically, true. But this is misleading. It’s true that the total U.S. Treasury debt outstanding — counting debt that is held in the government’s own trust funds used to pay for Social Security benefits — has more than doubled from over $9 trillion in early 2009 to roughly $20 trillion early this year. Why? Large deficits brought on by the Great Recession, bank bailouts, and stimulus spending were the initial culprits.
But this statement is pretty misleading in a couple different ways. For one thing, Trump is clearly not taking inflation into account, which makes the claim of Obama taking on “more new debt than nearly all other presidents combined” pretty meaningless. In inflation-adjusted terms, the years during and after World War II were a bigger period of debt than during the Obama administration. Also, Trump’s own economic plans were criticized strongly during the campaign, by analysts who said they would add significantly to the U.S. national debt.
“We’ve lost more than one-fourth of our manufacturing jobs since NAFTA was approved, and we’ve lost 60,000 factories since China joined the World Trade Organization in 2001.”
This is right too. The U.S. has lost roughly 5 million manufacturing jobs over that period. But the overwhelming majority, roughly 85 percent according to this study, of those jobs have been lost to automation, not global trade.
These are all legitimate gripes about the U.S. economy. But it misses the fact that Trump actually inherits the best economy of any recent president since George H.W. Bush. The U.S. was slowly emerging from the recession of 1990 when Bill Clinton took over in 1993. Likewise George W. Bush was dealing with the brief recession of 2001 during the early days of his administration. The economy was a garbage fire in crisis when Obama got hold over it in 2009.
By contrast, Trump inherits an economy that has created jobs for 76 straight months. Unemployment has fallen from a high of 10 percent in October 2009 to 4.8 percent in January. Inflation is low. Interest rates are low. Banks are safe, well-funded, and lending. The housing market is heating up. Auto sales are at record high levels. And median household incomes jumped by 5.2 percent 2015, the most recent data available. That’s the highest jump on record. Poverty also fell sharply that year.
Sure, the U.S. economy is not a worker’s paradise. There are still huge problems of inequality and poverty and real hardship. But objectively and broadly speaking, the U.S. economy is in pretty good shape. And that’s precisely why Trump is tearing it down rhetorically.
After all, the solid condition of the U.S. economy right now is a real risk for Trump. Just look at George H.W. Bush, who inherited an incredibly strong economy from Ronald Reagan but lost his re-election fight due to the 1990 recession.