How the Trump economy went south
It wasn’t the greatest economy ever, as Trump frequently claims. But before the coronavirus crisis exploded in March, President Trump oversaw a B+ economy that was probably solid enough for him to win reelection.
The Yahoo Finance Trumponomics Report Card now rates the Trump economy a C, a decline of four notches from Trump’s pre-virus standing. The Trumponomics Report Card compares six key data points under Trump—employment, manufacturing employment, exports, earnings, stock values and GDP—to the same metrics under six prior presidents at the same point in their presidencies. On three of those measures, Trump gets the worst marks of any president since Jimmy Carter in the 1970s. But he scores surprisingly well on three other metrics, resulting in his middling C grade. When President Obama was running for reelection in 2012, he had the equivalent of a B- on the economy—good enough for him to win.
The six components of the Report Card reveal the ravages of the coronavirus recession, caused by widespread lockdowns and consumers’ unwillingness to leave home. Overall employment is one of the three areas where Trump is performing worst among the seven presidents. The economy has lost 3.9 million jobs since Trump took office, the worst showing by far of any president since the 1970s. The second worst number was 605,000 jobs lost at the same point in George W. Bush’s first term, in 2004. The numbers under Trump have bounced back from a low point in April, but the employment hole remains deep. Here are the number of jobs lost or created under each of the last seven presidents, in millions:
GDP growth, adjusted for population, is also far lower under Trump than under any of the six prior presidents. Before the crisis, Trump had the second-best GDP numbers, after Jimmy Carter in 1980. But that changed when second-quarter GDP plummeted. Third-quarter GDP numbers come out Oct. 29—five days before Election Day—and will probably show a partial recovery. But that won’t be enough to change Trump’s grade on our report card.
Moody’s Analytics, which provides the data for our report card, created an index making it easy to compare the change in GDP under each president. The index for each president begins at 100, with the latest index number representing a percentage increase or decrease compared with 100. Trump’s latest index reading is 94.7, meaning GDP per capita has fallen 5.3% since he took office. That’s the only decline among the last seven presidents:
The third area where Trump gets the lowest mark is exports. This data only goes back to 1993, so we can only compare Trump with three prior presidents. Still, it’s ugly. This chart also represents an index created by Moody’s Analytics, measuring changes since the beginning of each president’s first term. The latest Trump number is 89.3, indicating a 10.7% drop in exports:
Trump does best on earnings, which is partly due to a statistical quirk. Trump has gotten the top mark on average hourly earnings since last October, probably because of a tightening labor market that, back then, was in its 10th year of expansion. When workers get hard to find, employers have to pay more, pushing average earnings up. Then, in April, average earnings spiked, at the same time layoffs also spiked. That indicates that companies laid off far more lower-paid workers than higher-paid ones, pushing the average pay of those still working way higher than normal. Here are the numbers, indexed to allow comparison from the start of each president’s first term. Trump’s index number is 106.5, or a 6.5% increase:
Perhaps most surprising is the resilience of manufacturing employment under Trump. Before the virus arrived, Trump had the second best manufacturing numbers, after Carter in 1980. He now ranks third, behind Carter and Bill Clinton in 1996. This is not necessarily a sign of success, however. The economy has now lost 164,000 manufacturing jobs under Trump, obviously nothing to brag about. The reason that counts as third best is that manufacturing job losses were far worse under Barack Obama, George W. Bush, George H.W. Bush and Ronald Reagan. Here are the numbers:
Finally, stock values have held up fairly well under Trump, despite the deep recession, putting him in fourth place on the value of the S&P 500 benchmark. Obama comes in first, followed by Clinton in 1996 and George H.W. Bush in 1992. This is also an index allowing us to measure changes from the beginning of each presidency. The Trump stock index number is 142.3, or a 42.3% rise in the S&P 500 since he took office:
There’s fiery debate over how much credit or blame a president deserves for the economy under his watch. No president, for instance, could have stopped the coronavirus outbreak earlier this year. But a more forceful national strategy on testing, tracing and precautionary measures could have limited the spread and allowed more businesses to reopen, sooner. Voters give Trump particularly poor marks for his handling of the crisis.
Trump has also benefited from the actions of others—most importantly, the Federal Reserve, which has provided unprecedented monetary stimulus that has limited the economic downturn and propped up stock values. And Congress has passed mammoth stimulus packages preventing the damage from being worse. Trump’s predecessor, Obama, enjoyed similar support, one reason he has the top mark on the stock market. No president does it all on his own, even if they try to convince you they do.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. Confidential tip line: rickjnewman@yahoo.com. Encrypted communication available. Click here to get Rick’s stories by email.
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