Most political analysts believe that the only way Trump is surviving this presidency is because the economy is doing so well. Trump’s continuous talking points relate around that point. But is Trump responsible for how the economy is doing? Is this really “his” economy?
The evidence would indicate that he is merely a placeholder for an operating economic surge that began before he took office.
There are just a few economic factors that a government role can play a large part. The flow of capital and providing an environment that creates jobs.
Now, the flow of capital is largely affected by Federal Reserve decisions and Janet Yellen has had the greatest effect on Fed decisions that have worked on the current economy. Trump decided to not renominate her – but her replacement, Jerome Powell, has more or less retained those policy decisions. Trump did add a stimulus to the economy with his tax cuts, but it stimulated areas that will only create a temporary boost. Companies took the large corporate tax cut and put it back into their own share prices. Very few actually took the money and used it for any expansion. Some of the stockholders got bonus dividends, but that doesn’t apply to the majority of consumer type Americans. So, the Trump tax cuts have mostly maintained the economic status quo, while providing future threats to the economy with increased deficits and debt.
In addition, Trump has put the economy in danger with a very strange tariff policy. Not since the days of Smoot-Hawley has government tried to manipulate trade so radically with a broad stroke tariff program. Unfortunately, Trump has little understanding of the effects and appears to have absolutely no long term plan about what he is doing. I sense that an economic downturn within a year is in the offing.
But the real engine behind the current economy is the recovery Obama miraculously undertook after the Bush administration total collapse. His economic stimulus and his radical plan to save the auto industry paid huge dividends in stoking this economic engine into the longest period of growth and job creation on record. Remember, Trump has been in office for about a year and a half – this current expansion began in June of 2009 – 111 months -(the second longest in history, record is 120). So to think that Trump inherited a “bad” economy is just a complete fabrication. Trump has navigated only about 15% of this current run. And he is more of a threat to end it than to continue to maintain it.
It is worth noting that the historic record expansion of 120 months occurred from March of 1991 to March 2001; covering the entire 2 terms of the Bill Clinton Presidency. Roughly bracketed by the Bush Sr tax hikes and ended with the Bush Jr tax cuts.
Our auto industry is operating at record rates (thanks to Obama). The previous administration proved that renewable energy and environmental regulations could cohabitate with a strong, growing economy. Obama proved that renewable energy could be a strong source of job growth. Obama proved that reforming health care did not have to hurt the economy and once again, proved that changing an industry could be a source of job growth.
All of these things have helped to maintain economic growth – and that growth is occurring despite Trump, not because of him.
Yes, Obama’s economic growth rates stayed at the lower end of the scale – he had two quarters above 4% and 1 quarter of 5% – but most of them stayed in the high end of 2% and low end of 3%. But it can be argued that slow steady growth contained inflation. With Trump, the jury is still out on how inflation will be affected.
So, is this the Trump economy? No, I would say not. For the time being, Trump can share in the maintenance of this robust economy, but a year and a half is not a full test.
Dark clouds loom on the horizon – so if you want to really thank someone for our economic growth, thank Obama.