“In many ways this is the greatest economy in the HISTORY of America.” So said – you guessed it – Donald Trump.
Modesty never being one of his pre-eminent attributes, the U.S. President clearly isn’t buying the Democrats’ line that the economy was trending so well when Barack Obama left the Oval Office that a mortician could get booming growth numbers.
The numbers under Mr. Trump are indeed impressive. The gross domestic product expanded at a heady 4.1 per cent rate in the last quarter. There is almost full employment. The stock market rocks. What’s not to like?
And yet, lament Republicans, the President is not getting the credit he deserves. It’s the liberal media, they gripe, those kale-eaters on the left. Check the record, they say. Five or 10 times more stories have been done on Russian election collusion than on an economy pushing toward the heavens.
It’s no small matter. The economy is Donald Trump’s best hope – maybe his only hope – to succeed. But while the glowing numbers are gaining him some applause, they’re not translating to support.
Having learned from bitter experience, the Democrats can tell him that a humming economy isn’t necessarily a big vote-getter. The growth rate under Mr. Obama was much, much like today’s going into the midterm elections in 2014. The Democrats were badly beaten. Bill Clinton left the economy in golden condition in 2000, but the Democrats were defeated that year by George W. Bush. The recovering economy didn’t prevent Hillary Clinton from losing – in the electoral college – to Mr. Trump.
Economists give more credit to Mr. Trump than to Mr. Obama for consumer and business confidence. The cerebral Democrat had the “Yes we can” slogan, but the brash businessman created a yes-we-can plus. His tax cut, his deregulation initiatives, his stimulus spending and his persona had an unshackling impact. The economy, noted one analyst, was a field mouse under Mr. Obama, but soars like an eagle under Mr. Trump.
A qualifier or two or three are in order. For starters, it’s hardly, as the king of hyperbole suggests, the greatest economy of all time. Growth rates have often been higher in the United States than they are today. In the 1960s, they averaged more than 5 per cent. Under Mr. Obama, the growth rate clicked in at more than 4 per cent on several occasions. Steven Rattner, an economic adviser in the Obama administration, correctly notes that job growth during Mr. Trump’s first 19 months in office is a bit less than in Mr. Obama’s last 19 months.
Mr. Trump’s tax cut was of primary benefit to corporations and the wealthy and has not brought much support from ordinary Americans. It may explain why Republicans have not made the tax cut a campaign priority in special elections. Job growth under Mr. Trump hasn’t produced much wage growth. According to the latest Labor Department statistics, inflation over the past year has outstripped wage increases. The cost of living rose 2.9 per cent, wages 2.7 per cent.
Another dampener is that this economic spurt is deficit-fuelled. As a candidate, Mr. Trump promised to eliminate the national debt within eight years. But deficits are taking off. The Congressional Budget Office has estimated the government deficit will reach US$1-trillion by 2020.
Also tarnishing the President’s economic management are his trade wars, with both adversaries and allies. With the economy doing so well, with jobs so plentiful, it’s a strange time to bring on trade wars and the instability that goes with them.
Midterm elections, some analysts contend, are referendums on the President more than on the economy. Heading an administration steeped in scandal, chaos and fabrication hardly helps Mr. Trump.
Another problem is that today’s economic high is not expected to last. Analysts don’t expect a big fall, but a notable levelling-off.
All things considered though, the economy is still the biggest arrow in the Trump quiver. If he can keep the issue front and centre, which isn’t easy, given the daily disruptions, the roaring economy will serve him well. Not to the extent that it fosters success – more likely to the degree that it limits the fall.