Not every number is a snow job.

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Some of Trump's Economic Stats Are True

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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During his campaign and even since becoming president-elect, Donald Trump has said a lot of things and cited a lot of figures that appear to be completely made up.

When he has talked about the economy, though, Trump has often relied on actual government statistics.

For example, there was Trump's charge that Barack Obama has been "the first president in modern history not to have a single year of 3 percent growth." You can wonder about whether this is entirely fairas Politifact did, but if you consult the Bureau of Economic Analysis's statistics on annual gross domestic product growth, which go back to 1930, it is undeniably true that there was at least one year of at least 3 percent growth during every presidency until the Obama years. And though 2016 isn't quite done yet, it will take a pretty spectacular fourth quarter to get growth over 3 percent for the year.

GDP figures do get changed around a lot after the fact, so it's conceivable that Obama will get his 3 percent year eventually. But I don't think we can really expect Trump to anticipate the scale and direction of future benchmark and comprehensive revisions to the national income and product counts.

Then there's the question of what "modern" means. If you define the modern era as beginning in the early 16th century, as historians generally do, then you'd have to consider the slow-growth first half of the 19th century. With U.S. real GDP growth averaging an anemic 0.7 percent a year from 1800 to 1840, according to one estimate, one has to think there were some presidents in the stretch who never had a 3 percent year. And of course William Henry Harrison, who was president for just a month in 1841, can't really be said to have had a year of GDP growth of any speed. But I quibble!

Similarly hard to contest is Trump's claim -- the exact quote here is from his acceptance speech at the Republican National Convention -- that "our trade deficit in goods reached nearly $800 billion last year alone." In 2015, the gap between U.S. goods exports and U.S. goods imports was $762.6 billion, according the Census Bureau. That's getting close to $800 billion!

It is true that Trump has often left off the "goods" qualifier. Because the U.S. runs a surplus in services, the overall trade deficit in 2015 was $500.4 billion. So Trump's wrong when he says that, but given that for most people $800 billion and $500 billion aren't significantly different in their hugeness, I don't know that he's being all that misleading.

On unemployment, Trump has been a heavy user of former Office of Management and Budget Director David Stockman's estimate of a "real" unemployment rate of more than 42 percent (the current official rate is 4.6 percent). As I wrote in my column Monday, Stockman was wildly and intentionally exaggerating, given that his estimate counted every retired person, stay-at-home parent and 16-or-older student as unemployed. But his numbers at least weren't pulled from thin air, and there is a good argument to be made that the official rate undercounts unemployment. Saying that unemployment is 42 percent is still quite misleading, but I guess if you're favorably disposed you might say Trump is at least truth-adjacent on this.

Taxes are another matter. Trump has repeatedly said that the U.S. is "the highest taxed nation in the world." In fact, among the 35 affluent nations that belong to the Organization for Economic Cooperation and Development, the U.S. has the fifth-lowest overall tax burden (that's including state and local taxes) as a share of gross domestic product. Only South Korea, Ireland, Chile and Mexico had lower tax burdens in 2015.

As the world's biggest economy, the U.S. does generate more tax revenue than any other country, but that's not what "highest taxed" means. I suspect that Trump's claim is derived from the fact that the U.S. top marginal corporate income tax rate is now second-highest in the world after that of the United Arab Emirates.  Which still doesn't mean U.S. corporations pay the highest taxes, by the way -- they're pretty good at avoiding them, and corporate income tax revenue has been declining as a share of U.S. GDP since the 1950s.

So anyway, Trump's tax claim is basically nonsense, but some of his other economic statements aren't. Maybe, just maybe, this is a sign that on economic questions the man realizes that there's a limit to the powers of his reality-distortion field. As the Wall Street Journal's Greg Ip put it last week

When gravity is pulling the economy in one direction, no number of presidential phone calls, threats or tweets can push it in another.

This is already happening. Expectations of tax cuts and infrastructure spending under Trump have helped drive up the value of the dollar. If those gains are sustained, that will boost the trade deficit and make it much harder for Trump's jawboning of manufacturers to keep jobs in the U.S. to have any noticeable impact on employment. In other words, the economic data surely aren't going to cooperate with all of Trump's plans. What are the odds he actually pays attention to the data?

  1. The Tax Foundation says the U.S. is now third behind the United Arab Emirates and Puerto Rico (Chad, the former No. 2, recently cut its tax rate), but I think it’s weird to include a U.S. territory in a ranking like that. Although it’s fine with me that Puerto Rico has its own Olympic team.

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Justin Fox at justinfox@bloomberg.net

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Stacey Shick at sshick@bloomberg.net