Barack Obama just tried to take credit for President Trump’s economy and in that way gave up the game and signaled to all that Trump is not going to be easy to beat.
“Eleven years ago today, near the bottom of the worst recession in generations, I signed the Recovery Act, paving the way for more than a decade of economic growth and the longest streak of job creation in American history,” Obama tweeted out before he was quickly taken to task by darn near everyone.
From The Washington Post: Beyond the stark difference between Obama-era GDP and today’s, let’s consider the boom in job creation spurred by that accelerated growth. When Obama left office, the economy had 2 million more people unemployed than job openings. In March, the most recent month for which the data are available, after 25 months of the Trump administration, there were 1.3 million more job openings than people unemployed. And that is with the unemployment rate at a 50-year low and more people working than at any time in the nation’s history.
March was the 13th consecutive month the U.S. economy produced more job openings than there were people unemployed. The first time that happened since the Bureau of Labor Statistics began reporting the data in 2000 was, well, 13 months ago. It didn’t happen once during the Obama administration.
Let’s look at what Obama-Biden bequeathed to the Trump administration on wages. When they took office in January 2009, wages were growing at 3.6 percent — and that was during the recession. By May of that year, the number had dipped to 2.9 percent. There was not a single month throughout the remaining 91 months of the Obama administration when wage growth hit even 2.9 percent — and only two months when it managed to hit 2.8 percent. When Obama-Biden left office in January 2017, wage growth was 2.4 percent. That is their legacy on wages.
With employers in the Trump era competing for workers to fill plentiful job openings, the country in April experienced its ninth straight month of wage growth at or above 3 percent. A recent survey of economists found that nearly 70 percent expected even faster wage growth over the coming year.
As the economy grows and wages rise, tax revenue is also increasing because of — not despite — the Republican tax cuts. Through the first seven months of this fiscal year, revenue is up 7 percent over the same period in fiscal 2016 (the last full fiscal year before the tax cuts). Unfortunately, spending has increased by 13 percent.
Eleven years ago today, near the bottom of the worst recession in generations, I signed the Recovery Act, paving the way for more than a decade of economic growth and the longest streak of job creation in American history. pic.twitter.com/BmdXrxUAUf
— Barack Obama (@BarackObama) February 17, 2020
As an array of media outlets and pundits are pointing out, the last three years of Obama’s presidency saw more new jobs created than the first three years of Trump’s presidency. Trump’s critics say that this is proof of Obama’s superior economic stewardship.
But not so fast. There are three major problems with this thesis.
First off, as any serious economist will point out, it is far harder to create jobs in an economy with ever reducing slack. This is to say, an economy in which means of human and capital production are more fully engaged. It’s one thing to create jobs right after a recession, but it’s a very different thing to keep creating jobs when the economy is doing well.
Still, that’s exactly what Trump is doing. The unemployment rate is at lows not seen for 50 years, and minorities are benefiting greatly. Wages continue to rise, and those seeking work continue to find it. Productivity is also growing at the fastest pace in nine years.
This is not to say that Trump’s trade wars haven’t negatively affected manufacturing and the economy at large. Nevertheless, the economy at large is thriving.
Another problem with the Obama-is-responsible-for-Trump’s-economy mantra is that it flies in the face of what was being said just before the election. Assessing a June 2016 Moody Analytics report (written by a Democratic Obama ally), which predicted economic calamity under Trump, the New York Times observed that “[the report’s] underlying assumptions about what Mr. Trump would do as president and how the effects of those policies would ripple through the economy are plausible, and squarely within the mainstream consensus view among economic forecasters about how the economy works.”
Similarly, an October 2016 Federal Reserve Bank of San Francisco predicted that “once the economy recovers fully from the Great Recession, GDP growth is likely to be well below historical norms, plausibly in the range of 1.5% to 1.75% per year. The preferred point estimate in Fernald (2016), who examines these issues in even more detail, is for 1.6% GDP growth.”
That’s a whole percentage point lower than the economy’s actual growth under Trump.
But there’s another factor to consider here. Namely, that whatever we think about Trump, the statistics strongly indicate that Obama’s economic stewardship was a failure. As was noted by CNN and others back in 2016, Obama’s economic recovery following the 2009 recession was the slowest on record. CNN’s report suggested this was partly due to the retirement of baby boomers. But if that’s true, why has the economy kept adding jobs under Trump? After all, we still have a lot of baby boomers retiring!