The Trump administration likes to brag about the economy. A lot. During a Fox News interview with Laura Ingraham on Nov. 2, Trump boasted about the economic gains during his first year in office, calling it “one of the greatest [economic revivals] in the history of our country.” He added: “I’m not getting enough credit for it.”
It’s not just Trump who brags.
White House Press Secretary Sarah Huckabee Sanders rattled off several tweets on Dec. 10, citing a series of one-year economic improvements. Her stats were taken from an editorial in Investor’s Business Daily that claims, “Donald Trump’s relentless focus on tax cuts, deregulation and draining the swamp is great for job growth.”
Regular readers of The Fact Checker know we automatically award Two Pinocchios to anyone (editorials included) who gives sole credit to a president for economic improvements. That’s because the U.S. economy is complex, and the decisions of companies and consumers often loom larger than the acts of government.
Moreover, it usually takes time and effort for presidential policies to work their way through the country. One year into the presidency, we are probably still feeling the effects of policies laid out by the previous administration. But Sanders asserts Barack Obama “now wants credit for the booming Trump economy,” arguing that the “economy is better under President Trump.”
Sanders’s comments veer in the direction of opinion, but it is worth asking: Has Trump singlehandedly hastened an “economic revival” in the United States? Or does Trump’s so-called “booming economy” have roots in the Obama era? Let’s take a look.
Regular readers of The Fact Checker may remember that we gave Trump Two Pinocchios for claiming that he created 1 million jobs just six months into his presidency. The claim was a departure from how other presidents have spoken about job creation. Most give credit to Americans, the economy, or businesses. But Trump takes the credit for himself.
“I’ve created over a million jobs since I’m president,” he bragged in August, while giving remarks about revitalizing U.S. infrastructure.
Since February, after Trump took office, the economy has gained nearly 1.7 million jobs, according to preliminary data on nonfarm payroll for November. But once again, the job gains are part of a multiyear trend that started in 2010 while Obama was still in office.
Here’s yearly job growth since 2000:
Now, here’s the job growth under Trump compared with the years since 2010, in the same February to November time period. Trump’s numbers look less impressive in context.
The Unemployment Rate
Trump has repeatedly boasted that the “unemployment rate is at a 17-year low,” citing the standard (U-3) unemployment rate from the Bureau of Labor Statistics, which hovers around 4.4 percent in 2017. His new-found excitement for the BLS numbers represents a considerable flip-flop for Trump, who claimed the unemployment rate was “nonsense” prior to his inauguration.
In fact, Trump has called the unemployment figure “fake” as many as 19 times before he embraced the numbers as president. And, nearly a year ago, we gave Trump Four Pinocchios for claiming “the unemployment figure, as you know, is totally fiction,” during a rally in Des Moines.
Trump inherited low unemployment numbers from Obama. Since 2011, the unemployment rate has steadily declined from a high of 9.6 percent following the Great Recession. It was 4.8 percent in January, when Trump took the oath of office, and it was 4.1 percent in the December employment report. Below are the yearly averages since 2011.
Let’s also look at another measure of unemployment: The U-6 unemployment rate, which covers people who have given up looking for a job because of poor economic conditions or people who are employed part-time because they can’t find work in their desired field. Some economists argue the official unemployment rate, which measures people who are actively looking for work, is too narrow. The U-6 figure, in contrast, covers a broader swath of workers.
And once again, since 2011, the U-6 rate has steadily declined.
The Employment to Population Ratio (25-54)
Another indicator of economic health is the employment to population ratio for people in their prime working years. This ratio measures the number of people employed as a share of the population. By narrowing in on people ages 25 to 54 we avoid counting older people who have retired or young people who aren’t working because they are still in school.
In 2017, the employment to population ratio reached 78.5 percent. It’s been on an upward trend since 2011.
The stock market
Just one month into taking office, Trump bragged about the stock market. During a news conference on Feb. 2, he claimed, “the stock market has hit record numbers.” We’ve pointed out before that this talking point is a flip-flop for Trump, who dismissed stock-market performance under Obama as a “big, fat bubble” ready to pop. (The U.S. stock market had been rising steadily since March 2009, shortly after Obama took office.)
Trump routinely cites numbers from the Dow Jones industrial average, a collection of 30 U.S. “blue-chip” companies. Much of the recent rise in the Dow can be attributed to a single company: Boeing. Over the course of the year, Boeing’s stock is up 82 percent.
But when looking at a broader index, Standard & Poor’s 500-stock index, it’s clear U.S. stocks haven’t rallied as robustly as their foreign equivalents. Trump’s been touting the stock market growth since February, but in November the S&P still lagged behind Japan, Germany and the United Kingdom.
In the chart below, the United States is represented by the green line. Japan is yellow. The U.K. is red, and Germany is blue. By December, the United States was performing better than the U.K. and had edged by Germany, but Japan’s index, the Nikkei 225, still claimed the top spot. In any case, the U.S. stock performance mirrors a global rise in stocks, suggesting it is not unique.
Another one of Trump’s frequent economic boasts is about Gross Domestic Product growth. GDP is the broadest measure of an economy. With each quarterly estimate Trump brags the GDP has grown at never before seen rates.
“We were at 3.2 last quarter, but we were at 3. And to be at 3 with a 1 point, that would have meant we would have hit 4 or thereabouts. And those are numbers that have not been seen for many years,” he said on Oct. 31 after the release of second quarter numbers.
Never mind that most economists think 4 percent growth is unlikely in a developed economy — or that quarterly GDP growth has often topped 3 percent during Obama’s presidency.
Trump hasn’t made much of a fuss about poverty during the first year of his presidency, but the poverty rate for families is the lowest it has been in nearly 10 years. For three consecutive years, 2010–2012, the poverty rate held stable at 11.8 percent. But in 2013 the rate began to decline, ending at 9.8 percent in 2016.
The Pinocchio Test
Sanders suggests that its outlandish to give Obama credit for the current economy, claiming that “we can all agree the economy is better under Trump.” The problem is, Trump’s economy owes largely to trends started in the Obama era. By almost every economic measure, the upward trends Sanders and Trump cite began while Obama was still in office.
We’ve said before that anyone who gives sole credit to a president for economic gains receives an automatic Two Pinocchios, and Sanders claim certainly fits the bill. But, we don’t rate opinions, so we’ll leave it up to the readers to decide.
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