There’s little question that, barring an unforeseen negative shock, all this presidential bragging will, to some extent, help the incumbent. The economy will be a tail wind for Trump’s reelection. That tail wind may be somewhat weaker than is usually the case, but his sails will have economic wind in them.
But how justified is that? Presidents always have and always will get credit for good economies and blame for bad ones. Should they?
In many cases, including Trump’s, presidents ride trends they inherited. If those trends change for the better, as with Barack Obama and Bill Clinton, they get credit (sometimes deservedly, as per their anti-recessionary interventions). If they worsen, as with George H.W. Bush, they get blamed. What makes Trump unusual is not that he’s riding favorable trends that predated him, nor that he’s claiming credit for them. It’s that he lies about them, claiming that the economy was awful until he saved it.
A typical Trumpian refrain maintains, totally against the facts, that when he took office, “America was stuck in a failed recovery and saddled with a bleak economic future.” In Davos, Switzerland, last month, Trump falsely claimed that the economy he inherited was “in a rather dismal state.” He claims to have “accomplished an economic turnaround of historic proportions.”
If you’re willing to abuse the data, it is not difficult to perpetrate this falsehood. A recent analysis by the president’s economic advisers argued that “Under the Trump Administration, net worth for the bottom 50 percent of households has increased at an annual rate 15 times higher than the average growth seen under the three prior administrations’ expansion periods.” The analysis shows a (truly impressive) 15 percent annualized growth rate for real net worth over the first three years of Trump’s term (to be precise, data exist for 11 quarters) vs. 1 percent for prior administrations.
The key omitted fact is that this was precisely the growth rate when Trump took office. If we back this indicator up over the final three years of Obama’s presidency, the growth rate is exactly the same: 15 percent, annualized. That’s solid evidence of trend-riding. (Full disclosure: I was Vice President Joe Biden’s economic adviser through 2011.)
If we do the same exercise for the decline in unemployment and the growth in jobs — compare the past three years with the previous three years — we see that unemployment fell less quickly under Trump than it did under Obama (down one point under Trump and two points under Obama). Job growth under these comparable periods was faster under Obama than Trump (up 6 vs. 5 percent).
To be clear, that’s not a slap at Trump’s jobs record. Much as you gradually pour more slowly when filling a glass to the brim, as the job market closes in on full capacity, gains decelerate. But on these and many other indicators, it is factually uncontestable that Trump is riding inherited trends.
There are also soft spots in the economy that could translate more into political head winds than tail winds. Even after the tax cuts, business investment has been unusually weak over the past couple of years, declining in real terms for the past nine months, the worst such streak since the last recession. Though the most recent data hint of a potential rebound, the manufacturing sector contracted for much of 2019. Factory employment averaged 4,000 per month last year compared with 22,000 per month in 2018. A particularly disturbing new trend is the decline in health coverage among the uninsured. Importantly for this analysis, Trump’s fingerprints are on these outcomes, as they are widely associated with the uncertainty invoked by his trade war and his attack on the Affordable Care Act.
Blowing the other way, two trends at opposite ends of the income/wealth scale have accelerated since 2016: the stock market and the pay of low-wage earners. The former is probably a function of high corporate profitability, and especially since so few middle- and low-income households hold much stock at all, that fuels the inequality arguments made by Trump’s opponents.
The faster growth in real pay of low-wage earners provides an important example of what happens when low unemployment is sustained and minimum wages go up. This may help the president, but even with these gains, there’s still a large gap between what people make and what they need, a gap that’s closed in part by safety-net programs that the administration is trying to dismantle.
How all of this translates into votes in an election that’s still months away is anyone’s guess. One recent poll shows an uptick in Trump’s economic approval by independent voters, but the president’s overall approval rating has always been much lower than historical economic correlations would predict. As political scientist Peter K. Enns recently put it: “The fact that we’re not seeing a corresponding uptick in presidential approval, that shows that the question of whether the economy will be less of a factor than in typical elections is still very much an open question.”
What’s not an open question is whether Trump really turned around a “failing,” “bleak,” “dismal” economy. He did not. Instead, as has been the case throughout his life, our president was born on third base and says he hit a triple.