Trump’s “Best Economy Ever” Isn’t
By Will Kaydos
Many people believe Trump’s claim that he created “the best economy ever” because they do not understand that a low unemployment rate and soaring stock markets don’t mean our economy is in good shape or the best it has ever been.
The unemployment rate says little about our labor markets and our economy. The mix of jobs, pay rates, weekly earnings, benefits, and other measures must also be analyzed to understand what’s happening in the labor markets and how that affects our economy.
Likewise, rising stock markets don’t indicate a strong economy. For example, booming stock markets and low unemployment preceded the 1929 Great Depression, the 2008 Great Recession, and other downturns.
Comparing the most meaningful measures of our economy’s health during Trump’s three years in office to historical data shows his Best Economy Ever is actually the worst economy we have had in the past fifty years.
A robust economy should provide a reasonably comfortable standard-of-living for the vast majority of a country’s population, be steadily increasing Real GDP, and have low unemployment with people at all income levels benefitting from economic growth.
It also should have a positive trade balance in goods and services, sound government and private sector finances, and total private and government sector debt at long-term sustainable levels.
Since World War II, our economy has best satisfied the essential requirements for a sound economy from 1960-1974, despite some shortcomings. This makes that period a useful benchmark for evaluating our economy’s historical performance.
In Trump’s 2017-2019 economy, the unemployment rate (4%) is the only measure better than what it was from 1960-1974 (5%). Average Weekly Earnings of Production and Non-supervisory Employees was only slightly lower than in 1960-1974, but all other measures were significantly worse.
For example, average Total Credit Market Debt from 1960-1974 was 153% GDP, but from 2017-2019 it was a staggering 352% GDP. In Trump’s economy, our Real GDP growth rate, Goods and Services Trade Balance, Personal Savings Rate, Net Domestic Private Investment, Government and Private Sector Debt, and Federal Gross Debt, were all much worse than in 1960-1974.
The enormous performance differences between our 1960-1974 economy and Trump’s 2017-2019 economy show why a better name for Trump’s Best Economy Ever is Our Worst Economy in the Past Fifty Years.
But Trump didn’t do all the damage from 1975 to 2019. He inherited a badly damaged economy that was slowly recovering and made policy changes that did produce some marginal benefits.
However, he certainly didn’t create an economic miracle that made our economy the strongest it has ever been.
Unemployment was lower, and stock markets were higher in Trump’s economy than in 2016 because the Trump administration borrowed or printed mountains of money and then spent it, loaned it, or gave it to taxpayers and businesses.
Hopefully, we can quickly get the virus under control and get our economy back to where it was before Covid-19 upset our world. Unfortunately, when we reach that point, there will still be an enormous amount of work to do before we can say we truly have a strong economy that benefits everyone.
We can rebuild our economy, but only if we have honest, rational, and knowledgeable leaders in the White House and Congress that will recognize reality and do what’s best for our country instead of what’s best for themselves and their political party.
We haven’t had the government we need for many years, and we don’t have the government we need now. Until we do, that is the most critical issue facing all Americans.