SOURCE:
NATIONAL REVIEWURL:
https://www.nationalreview.com/magazine/2018/08/13/trumponomics/by RAMESH PONNURU & MICHAEL R. STRAIN
Our economy is strong, as nearly every new release of economic data indicates. Industrial production is up. The unemployment rate is as low as it has been in two decades. Employment rates are growing and the disability rolls are shrinking. Measures of business confidence are bullish. Stocks are up. The economy has been growing, hitting 3 percent in some quarters. Inflation, meanwhile, remains low.
Usually such good economic news redounds to the benefit of the political party in power. This rule probably applies today. Even though President Trump and Republicans are less popular than politicians presiding over robust economic expansions usually are, in worse economic conditions they would in all likelihood be even more unpopular. In polls, more voters approve of the job Trump is doing on the economy than approve of the job he is doing generally.
Republicans are talking more about the state of the economy than Democrats are — and they are taking credit for it, too. It is a tribute, they say, to Republican policies, and especially to the tax cut Republicans enacted at the end of last year and to the deregulatory actions that the Trump administration has taken.
This kind of boasting is par for the course in politics. Many economists and many conservatives insist, however, that politicians and political commentators often overstate the extent to which a president affects an economy shaped by the decisions of millions of businesses and consumers. A disinterested look at the evidence — or, at least, the most disinterested one we can offer — suggests that in the case of the Trump administration there is some truth to both the Republican politicians’ and the economists’ views, but more to the latter.
Before assessing responsibility, though, we need to get a fix on how strong the economy is. Much has been made of the unemployment rate, which is as good as it has been since the late 1990s. Needed context can be gained by looking at how trends in the growth of employment, output, and so forth have changed. When you do, you see that we are still largely on the same trajectory as we were in the late Obama years.
The last five years saw rates of economic growth, adjusted for inflation, of 2.7, 2.7, 2, 1.8, and 2.6 percent. So the economy grew faster in Trump’s first year in office than it had in 2015 and 2016, but slightly slower than in 2013 and 2014. The economy has created slightly fewer jobs per month over the last two years than it did over the previous two. The unemployment rate has been falling more slowly during Trump’s presidency than it did during the end of Barack Obama’s presidency, too. (Of course, by the time Trump took office, it was already so low it didn’t have all that much room to fall.) The slow wage growth that characterized the recovery from the Great Recession under Obama has continued under Trump.
A recent study confirms the continuity in economic performance. A team of economists looked at the combination of other countries’ economies that most closely mimicked ours in performance between 1995 and 2016. They then looked at how this combination of economies had performed after the 2016 election.
The result: No detectible Trump effect, positive or negative. That conclusion feels about right.(EXCERPT) CLOCK ABOVE LINK FOR THE REST OF THE ANALYSIS...
