Trump vs. Obama: Who Has the Better Record in America's Economy?
As the campaign enters the home stretch, President Trump's main final argument is that he deserves four more years because he oversaw "the highest economic growth in the history of our country."
But even looking at the three years before COVID-19 wreaked havoc, the US economy under Trump performed similarly to that of President Obama's last three years. In some economic measures, it was a little worse, in others a little better, but in general it was not much different. And he was far from being the best of all presidents.
Consider: Under Obama, from 2014 to 2016, real gross domestic product, the broadest measure of economic activity, grew at an average annual rate of 2.5%. In Trump's first three years, from 2017 to 2019, real GDP expanded by an annual average of 2.6%, according to the Office of Economic Analysis.
In December 2017, Trump had said that GDP would skyrocket to "4, 5, and maybe even 6% or more." But despite its large corporate tax cut, GDP growth did not come close to reaching average annual gains of 4% in the 1990s or doubling in the early 1950s.
On Thursday the government will release its third quarter GDP report, which is expected to show a strong recovery from the 31.4% drop in the previous quarter. Still, for the year as a whole, GDP is projected to fall close to 4% thanks to the pandemic, the steepest drop in around 75 years.
On the job side, the U.S. economy added 6.6 million jobs in Trump's first three years, down from 8.1 million payroll gains in the past three years under Obama.
Trump has often bragged about his track record in production jobs, which has particular appeal to his working-class base and Midwestern voters. But even here, the difference is not much.
From late 2016 to late 2019, the country secured 1.27 million jobs in manual construction and manufacturing industries, though factory jobs stabilized in 2019, in part due to Trump's trade war with China. This, compared to 1.13 million construction and manufacturing jobs obtained between 2014 and 2016, according to the Bureau of Labor Statistics.
It is true that the unemployment rate in the country fell to a half-century low of 3.5% before the coronavirus outbreak in March, and that unemployment figures for Latinos, Blacks and Asians also fell to the lowest level on record. But economists point out that the real change in unemployment rates during their respective three-year periods was greater under Obama than under Trump.
In recent months, the Trump campaign has indicated that American household incomes rose faster during Trump's first three years in office than during the entire eight-year period under Obama. That's technically correct: Median income, adjusted for inflation, increased 5.8% from 2008 to 2016, up from 7.8% from 2016 to 2019, according to the Census Bureau.
But that doesn't take into account that Obama and Vice President Joe Biden took office in the middle of the Great Recession. It wasn't until 2013 that the family income stopped bleeding and a recovery began.
If you look at just the last three years of the Obama administration, median incomes grew 8.4%, a slightly faster rate than during Trump's first three years as president.
One measure that has clearly outperformed during the Trump administration is the stock market. The Standard & Poor’s 500 Index jumped by an annual average of 14.7% from the end of December 2016 to the end of 2019, roughly double the gain in the comparable period of Obama's last three years.
But only a small percentage of Americans own substantial amounts of securities, and market fluctuations have relatively little impact on their daily lives. By comparison, the prices of homes, which they perceive much more closely, increased on average 4.8% in Trump's first three years, compared to 4.9% during Obama's last three, according to Mark Zandi of Moody’s Analytics.
Trump has consistently displayed the performance of stocks, like a report card of his management of the economy. The president said in his debate last week that a Biden presidency would be a calamity for the stock market.
But investors boosted stocks in early fall, amid mounting bets that a Biden victory, combined with Democrats taking the Senate and keeping the House, the so-called blue wave, would actually be an advantage for the economy, at least. short term.
That's because a unified Democratic government raises the odds for big fiscal stimulus and infrastructure investment, similar to Biden's $ 2.1 trillion proposal for green economy development, as well as traditional projects like roads and bridges. .
However, a landslide Democratic victory also has potential downside risks for stocks and the economy: Biden has proposed an increase in taxes for corporations and wealthy Americans. That could weaken corporate earnings and eventually hurt the value of stocks.
At the same time, Jack Ablin, chief investment officer at Cresset Capital in Chicago, noted that Trump's 2017 corporate tax cuts failed to boost business spending as promised. Instead, record amounts were used for share buybacks and returned to investors as dividends, which helped boost the stock market but did much less for the overall economy.
That is one of the reasons that GDP growth never took off. But lower taxes and lower-than-projected government revenue generation, combined with sizable federal spending, especially on defense, also dramatically raised the nation's debt levels.
America's budget deficit was larger under Trump in his first three years, about $ 2.5 trillion, compared to $ 1.6 trillion under Obama in his last three years, according to the Congressional Budget Office.
If the economic comparisons between Trump and Obama are not very different, to some extent, that reflects the fact that presidents, despite all the credit and blame they sometimes claim and get for what happens to the economy, they actually have limited control over it.
For much of the year, polls have shown that Americans view Trump as better for the economy than Biden, though recently that leadership has waned in some polls.
Even with the pandemic that sent the country into recession, and almost certainly darker days ahead, Trump garnered a 54% approval rating for the economy in the latest Gallup poll. That's only surpassed by 57% for President Clinton in 1996, taking into consideration only those presidents who recently won reelection.
Experts say Trump's more favorable ratings on the economy, compared to other topics, including race relations and foreign affairs, partly reflect his reputation as a businessman, though information about his income, wealth and taxes remains largely unchanged. part hidden from the public. Economist Zandi adds that the stock market has contributed to Trump's approval rating on the economy, although he finds it ironic.
"The market has risen only because of the current economic difficulties, and interest rates are therefore low, and they are likely to stay that way for a while," he said.
