U.S. Economy

Trump's Lucky Break on the Economy

He gets high marks for job creation, a rare bright spot amid his historically low approval rating.

Winning.

Photographer: Nicholas Kamm/AFP/Getty Images

Americans aren't thrilled with President Donald Trump's performance so far, with a new ABC/Washington Post poll putting his approval rating at 36 percent -- the worst on record six months into a presidency -- and a Bloomberg News one putting it at 40 percent.

The one area where the president is making out at least OK, though, is on economic issues. Respondents to the Bloomberg National Poll gave Trump a 47 percent approval rating on "creating jobs" and 46 percent on "the economy."

And why shouldn't they? The U.S. economy isn't exactly setting records, but it is chugging right along, adding jobs and driving down the unemployment rate. This happens to be exactly what the economy was doing for several years before Trump took office, too -- if anything, job creation seems to have downshifted ever so slightly since January. But on the whole, things look better than they have at any time since the onset of the last recession in 2008. 1

Are these good times really Trump's doing? Mostly not, given that he has no significant legislative accomplishments, and economic momentum doesn't seem to have shifted much since he took office. But if one goes on the assumption that poll respondents are simply rating current economic performance (this may be an incorrect assumption, which I'll get to at the end of this column), his comparatively positive approval rankings on the economy make sense. Trump inherited a moderately healthy economy and hasn't screwed it up.

Other recent presidents haven't been quite so lucky. Here's what job growth 2 has looked like under every president since Ronald Reagan:

The Economies They Inherited

Nonfarm payroll employment growth, trailing six months

Source: U.S. Bureau of Labor Statistics

The luckiest of the lot here appears to be Bill Clinton, who inherited an economy that was already beginning to recover from the recession that helped boot George H.W. Bush from office. The unluckiest was Barack Obama, who inherited an economy still in free-fall. Reagan is an interesting case. When he took office, the economy was growing. It soon went into a deep recession caused by Federal Reserve Chairman Paul Volcker's inflation-fighting efforts, of which Reagan was remarkably tolerant. Then came a strong recovery boosted by Fed easing, tax cuts and deficit spending that propelled Reagan to a landslide re-election in 1984.

What happens next for Trump will do much to determine whether his presidency is judged a success or a flop -- or even survives. An economic upturn might gain him some much-needed maneuvering room. A downturn could finally turn Republicans in Congress against him, or leave him to contend with a Democratic House majority in 2019. A president's impact on the economy is limited. The economy's impact on this president could be decisive.

At least, that's what the historical record seems to indicate. Economists and political scientists have built multiple models that predict presidential elections based mostly or entirely on economic indicators -- because economic conditions so often appear to have decided elections in the past. The most famous of the models, constructed by Yale economist Ray Fair, predicted that slow gross domestic product growth would deliver Trump the popular vote by a 56 percent to 44 percent margin (not counting third-party candidates) last November. Instead, Hillary Clinton got 51.1 percent of the two-party vote. "Had the Republicans nominated a more mainstream candidate," Fair mused afterward, "they may have done much better -- much closer to what the equation was predicting."

Then again, thanks to the Electoral College, Trump won the election anyway. Immediately afterward, Gallup found that Republican voters' opinions of the state of the economy improved dramatically: with 49 percent saying the economy was getting better compared with just 19 percent the week before the election. Democrats' views shifted in the opposite direction, albeit not quite as sharply: to 46 percent, from 61 percent before the election. Perhaps increasing partisanship is making it harder for voters to accurately assess the state of the economy. Still, the actual state of the economy has to count for something, and so far it seems to have been helping Trump.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

  1. For example, the prime-age (25 through 54) employment-to-population ratio -- one of my favorite metrics -- has been higher this spring and early summer (78.6 percent in April, 78.5 percent in March and June) than at any time since September 2008.

  2. I used six-month employment growth because it seemed to offer the best mix of timeliness and comprehensibility (that is, the chart isn't overwhelmed by statistical noise).

To contact the author of this story:
Justin Fox at justinfox@bloomberg.net

To contact the editor responsible for this story:
Brooke Sample at bsample1@bloomberg.net

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