When the economy under President Barack Obama posted quarterly growth of just 1.9% in 2012, Citizen Donald Trump tweeted, “The economy is in deep trouble.”
That same reading Wednesday was celebrated by the Trump Commerce Department, which issued a statement that highlighted other achievements and tweaked the media.
The statement said: “…the U.S. economy continues its steady growth in defiance of media skeptics calling for a recession … Since President Trump took office, wages have surged, unemployment has hit record lows, and poverty has fallen for all Americans, including the country’s most vulnerable.”
Commerce Secretary Wilbur Ross reminded Americans that it’s the economy stupid.
Central to the Trump re-election argument is the message the economy is strong, stocks are near record highs and the trade war won’t hurt at home. But fact is, growth below 2% looks a lot like the slow-burn expansion in stretches of the Obama administration.
GDP is the broadest measure of the health of the economy. Third-quarter GDP at 1.9% was better than economists had feared but the second weakest of the Trump administration. Growth has slowed now for two quarters in a row.
Business investment cratered in the quarter, raising concerns that historic corporate tax cuts were a sugar rush that has faded (and swelled the deficit.) Add to that uncertainty over the trade war with China and the timing of new tariffs, and corporate purchasers are keeping their powder dry. “Real spending on business equipment has slowed sharply; we expect no near-term relief,” said Pantheon economics.
President Trump promised an economy supercharged by the rocket-fuel of his tax cuts and deregulation. At rallies and in front of the cameras he has promised 3%, 4%, 5% even 6% economic growth.
Instead, economist Chris Rupkey wrote to clients: “Economic growth still remains better during the Obama years with 2.9% in 2014 before the oil price crash, and the best the Trump administration has been able to do is grow the economy 2.8% in 2018. Even if growth miraculously soars 4.0% in the fourth quarter it won’t grow faster than 2.8% in 2019.”
Friday brings new data on job creation in October. The jobless rate is expected to remain near a 50-year low, but jobs growth could cool slightly.
And so far, job creation in the first 32 months of the Trump Administration has slightly lagged the last 32 months of the Obama years. (7.1 million versus 6.0 million.)
These are comparisons a president obsessed with being the biggest and the best will no doubt work to discredit.
But the biggest question is will voters care? Trumpian exaggeration and confidence is hardly new. It’s expected. And the fact is there is no recession. The economy is still growing. The jobless rate is low. Gas prices are cheaper than a year ago (except in California) and the stock market is near record highs.
Not long ago, Moody’s Analytics said barring an unlikely recession or a global shock, the economy is strong enough for Trump to be re-elected.
Until then, expect the president to engage his usual foils: The Federal Reserve for raising interest rates last year and not lowering them enough this year. (He has admired negative rates in Europe and Japan. Never mind that negative rates are a sign of distress, not success.) And he may sharpen his attacks on the media. (The Commerce Department in that official release swiped at “media skeptics calling for a recession.”)
In the near term, the biggest wildcard remains the outcome of US-China trade negotiations – an unpredictable story line that changes by the day.