May 27, 2019

How Good Is the Trump Economy, Really?

And looking at the growth rate instead of the level shows that the 2.09 percent improvement in the first year of the Trump administration is below a couple of the peaks of the Obama second term, including a 3 percent reading in the year ending in the first quarter of 2015.

In talking about the economy, the level, direction and rate of change all matter. They just matter in different ways.

The late 1990s, for example, featured both strong levels of economic activity and fast growth. In the aftermath of a steep recession in 1982, there was a different combination: a weak level of economic activity paired with fast growth. The 2010-2011 time frame featured weak economic activity paired with slow growth, a nasty combination.

The reason my analysis was more effusive about the recent economic results than it was about similar growth numbers during the Obama administration is that strong growth numbers are more impressive — and unexpected — at a time when the level of economic activity is already high. When the jobless rate was, say, 7 percent, we needed strong job growth just to put the unemployed back to work. To get similar job growth rates with an unemployment rate below 4 percent is reason for a little more giddiness.

So what is the most honest way of talking about the Trump economy? It goes like this: The president inherited an economy that had come a long way toward healing. During his administration, the economy has continued growing at about the same rate it did before he took office, pushing incomes, employment and output to yet higher levels.

There are plenty of problems that remain in the United States, economic and otherwise, and the degree of credit the president deserves for the state of the economy is an open debate. But this is a bathtub that is already pretty full, and the water’s rising nicely.

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