President Trump and former President Obama sparred on the campaign trail about who deserves credit for the strong economy, but the record is more complex than either describes.
While economic growth has been faster during Mr. Trump’s first 21 months in office than it was during Mr. Obama’s eight years, federal debt is growing faster now than it was during Mr. Obama’s second term. Mr. Obama, meantime, presided over faster overall growth in payroll jobs during his second term, but growth in manufacturing payrolls under Mr. Trump is faster than during Mr. Obama’s two terms. And while the stock market has rallied under Mr. Trump, it hasn’t measured up to the rebound during Mr. Obama’s first term from lows in the financial crisis.
No comparison is perfect. Mr. Obama came to office during a deep recession and financial crisis. Mr. Trump came into office during a long run of steady but historically slow economic growth. Mr. Obama had an eight-year record, while Mr. Trump’s is just 21 months. And no president deserves full credit or blame for an economy influenced by many factors beyond Washington’s reach.
The Wall Street Journal looked at the average monthly or quarterly performance of a range of economic and financial indicators for uniform measures of how the economy performed on both watches.
The economy was contracting when Mr. Obama took office. A recovery commenced within a few months, but it was slow by historic standards. Growth in gross domestic product has picked up speed during the first part of Mr. Trump’s first term. By mid-2020, it will have been the longest recovery on record, spanning the presidencies of both men.
The U.S. labor market didn’t bottom out until 2010, even though the recession ended in 2009. It took another four years to recover all the jobs lost during the 2007-09 recession. Job growth has been strong and steady since, spanning both presidencies, with slightly faster growth on a monthly basis during Mr. Obama’s second term.
A decadeslong slide in U.S. factory jobs—the result of increasingly competitive global trade and productivity-enhancing technologies—came to an end in 2010. Growth in manufacturing employment has accelerated during Mr. Trump’s term in office.
A banking crisis and recession helped cut the Dow in half between October 2007 and March 2009, with most of those losses coming before Mr. Obama took office. As the economy stabilized early in Mr. Obama’s first term, investors piled back into the stock market. That led to average monthly gains larger than those realized in Mr. Trump’s first months in office.
Stimulus programs and deep recession drove the federal budget deficit to nearly 10% of GDP in 2009, leading to a large rise in national debt. Growth in the national debt slowed later in Mr. Obama’s presidency amid battles with congressional Republicans over spending cuts. Government borrowing has since accelerated due to tax cuts and ramped-up government spending by Mr. Trump.
The unemployment rate remained close to 10% until late 2010. It has steadily declined since then, with some of the sharpest drops coming during Mr. Obama’s second term. Under Mr. Trump it has continued to fall, reaching its lowest level since 1969, at 3.7%.
Mr. Obama took office with consumer confidence near its lowest level since the “stagflation” economy of 1980. That left plenty of room for improvement over the course of his presidency as the recovery gained momentum. Consumer confidence has continued to climb under Mr. Trump, hitting an 18-year high in October.
The Federal Reserve cut short-term interest rates to near zero and bought trillions of dollars worth of Treasury and mortgage bonds to battle recession and slow growth. Yields on 10-year Treasury notes slowly declined as investors came to see a long period of very low inflation on the horizon. With the Fed now raising rates to keep the economy from overheating, borrowing costs are starting to creep higher.
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from Real Time Economics https://ift.tt/2yVEAfU
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