Economy Breaks Records on Trump’s Watch. He Wants All the Credit

About to break records for the longest expansion, the U.S. economy sure looks like an asset for a president gearing up to seek re-election.

“If voters went to the ballot box today, it would be the strongest economy in U.S. election history,” said Justin Waring, an investment strategist at UBS in New York.

Unemployment is close to a half-century low and inflation is so subdued that some have pronounced it dead. The two gauges added together are known as the “misery index.” Waring, who has crunched those numbers, says they show Americans are less miserable than they’ve ever been.

Which is exactly what President Donald Trump’s been telling them.

Trump is taking credit for the economy’s performance, and he’s getting strong approval ratings on the issue right now. That doesn’t mean it will automatically carry him to a second term. Other issues energize voters too, while the decade-long run of economic growth could come to an end before election day, still more than a year off.

And even if it doesn’t, there are reasons why this expansion may lack oomph at the ballot box—as the Democrats found out in 2016.

For starters, the rate of growth has been dismal.

In the decade through March 2019, output increased a total of 25%. Look at all the possible 10-year periods since World War II, even the ones that include recessions, and four-fifths of them posted better numbers.

The Record U.S. Economic Expansion Is Weaker Than it Seems

Rolling 10-year percent change in GDP, by quarter
2019 Q1 18907.5
2018 Q4 18765.3
2018 Q3 18665.0
2018 Q2 18511.6
2018 Q1 18324.0
2017 Q4 18223.8
2017 Q3 18120.8
2017 Q2 17995.2
2017 Q1 17863.0
2016 Q4 17784.2
2016 Q3 17706.7
2016 Q2 17622.5
2016 Q1 17523.4
2015 Q4 17456.2
2015 Q3 17438.8
2015 Q2 17397.0
2015 Q1 17254.7
2014 Q4 17113.9
2014 Q3 17033.6
2014 Q2 16830.1
2014 Q1 16621.7
2013 Q4 16663.6
2013 Q3 16531.7
2013 Q2 16403.2
2013 Q1 16383.0
2012 Q4 16239.1
2012 Q3 16220.7
2012 Q2 16198.8
2012 Q1 16129.4
2011 Q4 16004.1
2011 Q3 15820.7
2011 Q2 15825.1
2011 Q1 15712.8
2010 Q4 15750.6
2010 Q3 15672.0
2010 Q2 15557.3
2010 Q1 15415.1
2009 Q4 15356.1
2009 Q3 15189.2
2009 Q2 15134.1
2009 Q1 15155.9
2008 Q4 15328.0
2008 Q3 15667.0
2008 Q2 15752.3
2008 Q1 15671.4
2007 Q4 15762.0
2007 Q3 15666.7
2007 Q2 15582.1
2007 Q1 15493.3
2006 Q4 15456.9
2006 Q3 15326.4
2006 Q2 15302.7
2006 Q1 15267.0
2005 Q4 15066.6
2005 Q3 14972.1
2005 Q2 14839.8
2005 Q1 14771.6
2004 Q4 14609.9
2004 Q3 14465.0
2004 Q2 14329.5
2004 Q1 14221.1
2003 Q4 14145.6
2003 Q3 13985.1
2003 Q2 13751.5
2003 Q1 13634.3
2002 Q4 13559.0
2002 Q3 13538.1
2002 Q2 13478.2
2002 Q1 13397.0
2001 Q4 13280.9
2001 Q3 13244.8
2001 Q2 13300.0
2001 Q1 13222.7
2000 Q4 13260.5
2000 Q3 13178.4
2000 Q2 13160.8
2000 Q1 12924.2
1999 Q4 12877.6
1999 Q3 12662.4
1999 Q2 12498.7
1999 Q1 12403.3
1998 Q4 12287.0
1998 Q3 12091.6
1998 Q2 11942.0
1998 Q1 11832.5
1997 Q4 11715.4
1997 Q3 11615.6
1997 Q2 11472.1
1997 Q1 11284.6
1996 Q4 11212.2
1996 Q3 11097.0
1996 Q2 10998.3
1996 Q1 10817.9
1995 Q4 10737.5
1995 Q3 10665.1
1995 Q2 10575.1
1995 Q1 10543.6
1994 Q4 10506.4
1994 Q3 10387.4
1994 Q2 10327.0
1994 Q1 10189.0
1993 Q4 10091.0
1993 Q3 9955.6
1993 Q2 9908.3
1993 Q1 9851.0
1992 Q4 9834.5
1992 Q3 9733.0
1992 Q2 9637.7
1992 Q1 9534.3
1991 Q4 9421.6
1991 Q3 9388.8
1991 Q2 9341.6
1991 Q1 9269.4
1990 Q4 9312.9
1990 Q3 9398.5
1990 Q2 9392.3
1990 Q1 9358.3
1989 Q4 9257.1
1989 Q3 9238.9
1989 Q2 9171.0
1989 Q1 9101.5
1988 Q4 9009.9
1988 Q3 8891.4
1988 Q2 8839.6
1988 Q1 8725.0
1987 Q4 8680.2
1987 Q3 8533.6
1987 Q2 8460.2
1987 Q1 8369.9
1986 Q4 8308.0
1986 Q3 8263.6
1986 Q2 8185.3
1986 Q1 8148.6
1985 Q4 8073.2
1985 Q3 8013.7
1985 Q2 7893.1
1985 Q1 7824.2
1984 Q4 7749.2
1984 Q3 7686.1
1984 Q2 7612.7
1984 Q1 7483.4
1983 Q4 7339.9
1983 Q3 7189.9
1983 Q2 7049.0
1983 Q1 6892.1
1982 Q4 6802.5
1982 Q3 6799.8
1982 Q2 6825.9
1982 Q1 6794.9
1981 Q4 6902.1
1981 Q3 6978.1
1981 Q2 6895.6
1981 Q1 6947.0
1980 Q4 6813.5
1980 Q3 6688.8
1980 Q2 6696.8
1980 Q1 6837.6
1979 Q4 6816.2
1979 Q3 6799.2
1979 Q2 6749.1
1979 Q1 6741.9
1978 Q4 6729.8
1978 Q3 6640.5
1978 Q2 6574.4
1978 Q1 6329.8
1977 Q4 6309.7
1977 Q3 6309.5
1977 Q2 6197.7
1977 Q1 6079.5
1976 Q4 6008.5
1976 Q3 5965.3
1976 Q2 5932.7
1976 Q1 5889.5
1975 Q4 5760.0
1975 Q3 5683.4
1975 Q2 5587.8
1975 Q1 5548.2
1974 Q4 5616.5
1974 Q3 5638.4
1974 Q2 5692.2
1974 Q1 5678.7
1973 Q4 5728.0
1973 Q3 5674.1
1973 Q2 5704.1
1973 Q1 5642.7
1972 Q4 5506.4
1972 Q3 5415.7
1972 Q2 5365.0
1972 Q1 5246.0
1971 Q4 5151.2
1971 Q3 5139.1
1971 Q2 5097.2
1971 Q1 5069.7
1970 Q4 4935.7
1970 Q3 4989.2
1970 Q2 4943.6
1970 Q1 4936.6
1969 Q4 4943.9
1969 Q3 4968.2
1969 Q2 4935.6
1969 Q1 4920.6
1968 Q4 4844.8
1968 Q3 4825.8
1968 Q2 4788.7
1968 Q1 4710.0
1967 Q4 4615.9
1967 Q3 4581.3
1967 Q2 4538.4
1967 Q1 4535.6
1966 Q4 4495.8
1966 Q3 4459.2
1966 Q2 4421.7
1966 Q1 4406.7
1965 Q4 4302.0
1965 Q3 4205.1
1965 Q2 4113.6
1965 Q1 4062.3
1964 Q4 3966.3
1964 Q3 3954.1
1964 Q2 3893.3
1964 Q1 3851.4
1963 Q4 3771.8
1963 Q3 3747.3
1963 Q2 3666.7
1963 Q1 3626.0
1962 Q4 3586.8
1962 Q3 3575.1
1962 Q2 3531.7
1962 Q1 3500.1
1961 Q4 3438.7
1961 Q3 3372.6
1961 Q2 3309.1
1961 Q1 3253.8
1960 Q4 3232.0
1960 Q3 3274.0
1960 Q2 3258.1
1960 Q1 3275.8
1959 Q4 3203.8
1959 Q3 3194.7
1959 Q2 3192.4
1959 Q1 3121.9
1958 Q4 3063.1
1958 Q3 2993.1
1958 Q2 2925.4
1958 Q1 2906.3
1957 Q4 2983.7
1957 Q3 3014.9
1957 Q2 2985.7
1957 Q1 2992.2
1956 Q4 2973.2
1956 Q3 2925.0
1956 Q2 2927.7
1956 Q1 2903.7
1955 Q4 2915.0
1955 Q3 2897.6
1955 Q2 2859.0
1955 Q1 2813.2
1954 Q4 2735.1
1954 Q3 2682.6
1954 Q2 2652.6
1954 Q1 2649.8
1953 Q4 2662.5
1953 Q3 2703.4
1953 Q2 2718.7
1953 Q1 2697.9
1952 Q4 2648.6
1952 Q3 2564.4
1952 Q2 2546.0
1952 Q1 2540.6
1951 Q4 2513.7
1951 Q3 2508.2
1951 Q2 2457.5
1951 Q1 2415.7
1950 Q4 2383.3
1950 Q3 2338.5
1950 Q2 2251.5
1950 Q1 2184.9
1949 Q4 2102.3
1949 Q3 2120.0
1949 Q2 2098.4
1949 Q1 2105.6
1948 Q4 2135.0
1948 Q3 2132.6
1948 Q2 2120.4
1948 Q1 2086.0
1947 Q4 2055.1
1947 Q3 2023.5
1947 Q2 2027.6
1947 Q1 2033.1
Source: Bureau of Economic Analysis

Workers’ paychecks have also been growing slowly by past standards, and the portion of the national income that goes to wage-earners—known as the labor share—hasn’t recovered from the historic lows it reached after the financial crisis.

Trump likes to point out that the economy has accelerated on his watch. And economists do credit the president’s policies—lower taxes, plus an increase in government spending agreed with Congress—for faster growth rates starting in 2018.

‘Temporary Boost’

The question is: Can it last? The administration predicts that the economy can keep expanding at 3 %. But at the Federal Reserve, for example, none of the 17 policy makers expect growth next year to be faster than 2.2 %.

Skeptics say Trump has engineered a government-led sugar rush—loosening the purse strings, and saddling America with bigger budget deficits, without delivering the promised surge in business investment that would translate into lasting gains.

Tax cuts “provided a temporary boost to growth that is already fading,” said Mark Zandi, chief economist at Moody’s Analytics Inc. “There’s been no increase in long-term trend growth.”

A number of economists disagree. Stephen Stanley at Amherst Pierpont Securities LLC says Trump’s tax breaks for business, plus his bonfire of red tape, have meaningfully increased the economy’s capacity to grow in the long run. He acknowledges, though, that the jury will still be out on that question when voters go to the polls next year.

Trump’s trade war with China, which most economists say is a near-term threat to U.S. growth, is another likely campaign issue in 2020. Joe Biden, vice president in the Obama administration and the early frontrunner among Democrats, has attacked Trump for hurting American business with his erratic use of tariffs.

Trump inherited a strong economy, Biden told a rally in Philadelphia last month, and “just like everything else he’s been given in his life, he’s in the process of squandering that.”

‘Major Push’

Still, many Democrats agree on the need for a tough approach to China. And Stanley says there’s plenty of time for Trump to resolve the dispute in a way that will give the economy—and his re-election prospects—a big boost.

“If the administration is able to deliver any kind of deal with China, that is going to be a major push for the campaign,” he said. Companies have put plans on hold amid the trade uncertainty, so there’s “a lot of pent-up investment demand.”

Another angle of attack for Trump’s challengers is inequality. Economic growth numbers are aggregates, and say nothing about who benefited. Democrats to Biden’s left, like Senators Bernie Sanders and Elizabeth Warren, are especially vocal in arguing that too many Americans have been left out of the recovery.

Read More: Did Capitalism Kill Inflation?

Most economists say Trump’s tax cuts were skewed toward the rich. But the uneven distribution of income was already a feature of the expansion when Obama was president.

That continuity is true for many of the more upbeat trends in the economy too—like the jobs numbers often celebrated by Trump. The decline in unemployment hardly seemed to alter with the change in president, though Trump supporters point out that it’s gone on for longer than many economists thought was possible.

In the end, some analysts say, the main reason why this expansion has lasted so long isn’t due to policies under either administration. It’s simply a function of the severity of the recession that hit the U.S. between 2007 and 2009.

That’s the view of Jeffrey Frankel. A Harvard professor, he’s also a member of the committee at the National Bureau of Economic Research that rules on when recessions began and ended—providing the official dating for American business cycles.

After the financial crisis, he said, “the economy had fallen so far below its potential that it took many years to climb its way out of the hole.”