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Rating the Trump Economy Pre-Covid-19? Just Average

Rating the Trump Economy Pre-Covid-19? Just Average

Sunday, 16 August, 2020 - 07:00

If voters opt in November to toss Donald Trump out of the White House, as polls seem to indicate they will, he will probably leave office with the worst economic growth record of any president since Herbert Hoover.

That is, if real gross domestic product grows at a spectacular 18% annual pace in the current quarter, 6.5% in the fourth quarter and 5% in the first quarter of next year — the median forecast from the economists tracked by Bloomberg — annualized growth from Trump’s first quarter in office to his last will be 0.6%. If the economy does far better than that, and real GDP in the first quarter of 2021 rebounds to the level of the fourth quarter of 2019, annualized growth would be 1.7%, just barely edging out George W. Bush’s time in office (1.73% to 1.72%) for second-worst since Hoover.

Such comparisons do seem somewhat unfair to the current president, of course. The unprecedented 32.9% annualized drop in real GDP in the second quarter was the fault mainly of a global pandemic. President Trump’s efforts to cope with Covid-19 have perhaps been more fumbling than those of his counterparts in some other wealthy countries, but those countries have seen similar or larger drops in GDP.

This should perhaps be an indication that economic growth is not necessarily the best or fairest measure of presidential economic performance. Sometimes luck plays a much bigger role than policy. Still, since economic growth often is used as a measure of presidential economic performance, and the July 30 GDP report with the negative 32.9% headline included revisions of the last five years of National Income and Product Accounts of which GDP is part, this seemed like as good a time as any to take final look at US growth under Trump before the pandemic ruined everything, and how it compares with growth under past presidents.

These numbers aren’t perfectly comparable to the GDP tallies cited in the second paragraph because they’re based on an average of GDP and gross domestic income, a measure calculated by the Bureau of Economic Analysis from different sources than GDP that should in theory be identical to GDP but never quite is. Putting the two together doesn’t alter the long-run picture but is said to give a more accurate accounting of quarter-to-quarter changes. Because GDI isn’t released until a month after GDP is — we don’t know yet how big the second-quarter decline in GDI was — it doesn’t get nearly as much attention. I’ve been on something of a crusade to give it more play.

Hoover, Franklin Roosevelt and Harry Truman aren’t on the chart because the BEA’s quarterly GDP and GDI numbers only go back to 1947, a couple of years into Truman’s first term. Using the annual data that is available back to 1929, the compound annual growth rates during their presidencies come out to -7.4% for Hoover, 9.1% for Roosevelt and 1.9% for Truman. For the presidencies for which there is quarterly data I’ve measured from the first quarter in office to the last because that seems to me the fairest and simplest practice, allowing some lag time for new policies to take effect but not extending the calculations well into the next presidency.

By this measure, economic growth under Trump before the pandemic ranks toward the back of the pack, ninth out of the past 12 presidents, 0.04 percentage points behind Dwight Eisenhower and 0.08 ahead of Trump’s predecessor Barack Obama. Throw in the first quarter of this year with its first hints of pandemic damage — a level of economic bad luck encountered by lots of other presidents — and Trump falls to 10th, behind Obama.

One problem in making such comparisons over time is that population growth is a major component of economic growth, and though presidential actions (especially immigration policies) can have some effect on population, it seems misleading to judge current growth against that of eras when the ranks of potential workers in the US were expanding by leaps and bounds. So here’s economic growth adjusted for growth in the Bureau of Labor Statistics’s estimates of the civilian working-age (16 and older) population.

This puts economic performance under Trump, and Obama, in a better light, with pre-pandemic Trump coming in fifth place out of 12 and Obama in seventh. Growth in the 2010s didn’t match up to true economic boom periods such as the 1960s under John Kennedy and Lyndon Johnson, the 1980s under Ronald Reagan or the 1990s under Bill Clinton, but it was a whole lot better than in the decade that preceded it.

Another striking takeaway from the chart is that of the 11 presidents who preceded Trump, the five with the worst per-capita growth records were all Republicans. Before the pandemic Trump was not in that company, but barring a spectacular economic and political comeback he is now on track to make it six out of 12.

I wouldn’t make too much of this: As mentioned, luck plays a big role, and the partisan makeup of Congress probably does, too. Pro-growth policies can pay dividends long after a president has left office, and the effects of growth-retarding policies can linger. Still, it is interesting to see that the oft-heard claims that Republicans prioritize economic growth while Democrats care more about how the economic pie is divided don’t get any support from the GDP and GDI data.


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