A Look At Trump’s Economic Legacy
Examining the outgoing president’s policies from tax cuts to trade wars.
President Donald Trump campaigned as a billionaire businessman and champion of the working class with the economic prowess and deal-cutting skills that politicians in Washington, D.C., lacked.
He summed up his position neatly during the campaign: “I’ll be the greatest jobs president that God ever created.”
On the campaign trail, Trump claimed to be laser-focused on bringing back manufacturing and mining jobs, renegotiating trade deals that led to work disappearing overseas and curtailing immigration.
His Clintonian tack of “it’s the economy, stupid,” despite the myriad scandals and investigations that dogged him, largely worked as GDP grew at a healthy clip, the stock market soared and unemployment rates hit a half-century low, until the coronavirus pandemic gutted the job market.
Yet as he leaves after his one-term tenure, Trump has become the first president since Herbert Hoover during the Great Depression to depart office with fewer jobs in the country than when he entered.
Economists say Trumps economic legacy will be defined by his failure in leadership during the COVID-19 pandemic that exacerbated the financial downturn, domestic policies that overwhelmingly benefited the wealthy, and international trade policies that hurt U.S. industry while simultaneously alienating allies.
Here is a look at the outgoing president’s legacy on the U.S. economy.
Trump Country Labor Markets Faring Better In The Biden Economy Report Finds
Why it matters: Beyond the political irony, the last couple of years have seen a boom in the counties that make stuff, where the manufacturing, energy and agriculture sectors are a disproportionate share of their economies. And in a reversal of the 2010s, the status quo has been less kind to big-city knowledge economies.
- That divide increasingly represents politics as well as economics, with the goods-producing areas voting red and the services-producing areas voting blue.
Details: As of the first quarter of 2022, counties that voted for Trump were 0.3% below their pre-pandemic employment levels, according to the report that analyzed government data. For Biden counties, that gap was 1.8%.
Between the lines: To understand whyblue state labor markets are bouncing back more slowly, look to the economic makeup of the geographies.
- In many ways, the forces that explained why these areas thrived in the years leading up to the pandemic are now weighing on recovery.
Counties Biden won include nearly all the country’s key business districts that were once a consistent bustling center of economic activity.
Consumer Spendingup But Underperforming
American consumers are the backbone of the US economy and are not easily fazed. Although consumers sharply cut back on spending at the start of the pandemic, they were quick to reopen their wallets in May and June once stimulus checks and unemployment benefits came to their aid. Retail spending on goods, particularly through online retailers, rebounded swiftly. Even with a quick recovery, though, consumer spending has grown less under Trump than under any of the prior five presidents.
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Gross Domestic Producta Deep Recession
The widest measure of economic activity â gross domestic product â measures the value of the goods and services produced in the country. It typically grows between 2% to 3% per year after adjusting for inflation. Trumpâs first three years were all within that range, but 2020 saw a deep decline. We donât have a full year of data yet, but the second quarter was the worst in records going back to 1947. Third-quarter data, which was released on Thursday, showed a partial recovery.
Additional development by Byron Manley
Trumps International Economic Legacy
If Donald Trump loses the United States presidential election in November, he will ultimately be seen to have left little mark in many areas. But in t
- Publishing date
- 03 May 2021
This opinion post was originally published in Project Syndicate.
It would be foolish to start celebrating the end of US President Donald Trumps administration, but it is not too soon to ponder the impact he will have left on the international economic system if his Democratic challenger, Joe Biden, wins Novembers election. In some areas, a one-term Trump presidency would most likely leave an insignificant mark, which Biden could easily erase. But in several others, the last four years may well come to be seen as a watershed. Moreover, the long shadow of Trumps international behaviour will weigh on his eventual successor.
In some areas, a one-term Trump presidency would most likely leave an insignificant mark
On climate change, Trumps dismal legacy would be quickly wiped out. Biden has pledged to rejoin the 2015 Paris climate agreement on day one of his administration, achieve climate neutrality by 2050, and lead a global coalition against the climate threat. If this happens, Trumps noisy denial of scientific evidence will be remembered as a minor blip.
In a surprisingly large number of domains, Trump has done little or has behaved too erratically to leave an imprint
In US-China relations, it is not clear whether Trump merely precipitated a rupture that was already in the making
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How Every President Since Hoover Has Affected The Economy
Kimberly Amadeo is an expert on U.S. and world economies and investing, with over 20 years of experience in economic analysis and business strategy. She is the President of the economic website World Money Watch. As a writer for The Balance, Kimberly provides insight on the state of the present-day economy, as well as past events that have had a lasting impact.
David Hume Kennerly / Getty Images
The U.S. gross domestic product growth rate measures the nation’s economic growth. It’s the percent change in the GDP from one quarter or year to the next. That makes it a good way to determine which president has had the biggest impact on the economy.
The business cycle explains why faster growth is not always better growth. It will create an asset bubble if the economy expands too rapidly. The resulting contraction leads to a recession when that bubble bursts. Growth must be sustainable to create a healthy economy. Economists agree that the ideal GDP growth rate is between 2% and 3%.
Donald Trump Had An Economic Record That Will Be Remembered
I can never defend the behavior of Donald Trump since the election last fall. It deserves condemnation. But this must not detract from his strong economic record, notably when it comes to the progress in the financial status for the middle class and minorities. Millions of people around the country benefited from his Make America Great Again policies.
These facts are vital because the historical record should be accurate. No matter what one thinks of Trump, we need to learn the right policy lessons of what works and what does not in creating broad prosperity for America. Trump reduced taxes, unleashed the economy, renewed domestic energy production, and overhauled trade deals to place the country first.
Just like when Ronald Reagan became president, almost all of the liberal commentators and academics predicted that the policy of Trump would not work, and that they would harm the economy and stock market. The Washington Post famously claimed before the 2016 election that Trump could destroy the world economy. Did that turn out to be true?
Let us examine the success in the first three years of his administration before the coronavirus flattened the economy. The unemployment rate fell less than 4 percent, which was near the lowest in half a century. The inflation rate fell to 1 percent, which was even below the target level set from the Federal Reserve. This has kept the interest rates on mortgages and many other loans down to the lowest level in modern times.
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Federal Corporate Income Tax Receipts
During the six months following enactment of the Trump tax cut, year-on-year corporate profits increased 6.4%, while corporate income tax receipts declined 45.2%. This was the sharpest semiannual decline since records began in 1948, with the sole exception of a 57.0% decline during the Great Recession when corporate profits fell 47.3%.
Federal corporate income tax receipts fell from about $297 billion in fiscal year 2017 to $205 billion in fiscal year 2018, nearly one-third. This revenue decline occurred despite a growing economy and corporate profits, which ordinarily would cause tax receipts to increase. Corporate tax receipts fell from 1.5% GDP in 2017 to 1.0% GDP in 2018. The pre-Great Recession historical average was 1.8% GDP.
Federal Budget Shutdown Of 20182019
On December 22, 2018, the federal government went into a partial shutdown caused by the expiration of funding for nine executive departments. The lapse in funding occurred after Trump demanded that the appropriations bill include funding for a U.S.-Mexico border wall. The shutdown ended on January 25, 2019, with the total shutdown period extending over a month, the longest in American history. By mid-January 2019, the White House Council of Economic Advisors estimated that each week of the shutdown reduced GDP growth by 0.1 percentage points, the equivalent of 1.2 points per quarter. About 380,000 federal employees were furloughed, some public services were shut down, and an additional 420,000 employees for the affected agencies were expected to work with their pay delayed until the end of the shutdown, totaling 800,000 workers affected out of 2.1 million civilian non-postal federal employees.
A January 2019 Congressional Budget Office report estimated that the 35-day partial government shutdown cost the American economy at least $11 billion, including $3 billion in permanent losses the CBO estimate excluded indirect costs that were difficult to quantify. The shutdown had an adverse effect on the budgets of state and local governments, as states covered some federal services during the shutdown.
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Economic Recovery Under Obama
At CNN, we start with the facts. Visit CNN’s home for Facts First.Facts First:If you look solely at the average rate of GDP growth, it’s true that that the economy recovered more slowly after the Great Recession than during previous rebounds. But growth hasn’t been exceptionally better under Trump.GDP growthexperienced since World War II
President Donald Trump Inherited A Strong Economy And It Continued To Grow At A Healthy Rate During His First Three Years In Office Then The Covid
At the start of Donald Trumpâs presidency in January 2017, the economy was healthy.
Employers had added jobs for 76 months straight â the longest hiring streak on record at the time â and unemployment was just 4.7%, a 10-year low. Corporate profits were near all-time highs, and so were stocks. Overall, gross domestic product was growing around 2.5% a year â a modest rate for the worldâs largest economy. Not everything was rosy: the federal debt was at its highest level since the 1950s. But by most metrics, it was hard to deny: the economy was on solid footing. And fortunately for Trump, the growth continued from there.
Then came the pandemic.
Below, weâve tracked 10 indicators to show how the economy evolved under each president from Ronald Reagan to Trump. Keep in mind, each presidency started under different circumstances. George W. Bushâs first year in office was plagued by the dot-com bust and the September 11th attacks. Barack Obamaâs started with the Great Recession, following a devastating housing crash and a global financial crisis. Despite these crises, however, most recent presidents have presided over a growing economy during their time in office. The Trump presidency will be characterized by the countryâs response to the Covid-19 pandemic, which is still playing out both as a health crisis and an economic one.
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The Economy Remains In A Massive Hole
Seven months into the crisis, COVID-19 and the Trump Administrations failure to control it continue to constrain the recovery. While the economy, with the help of the CARES Act, has made critical progress since Spring 2020, output and employment are still extremely depressed relative to their levels before the pandemic. And with labor market gains slowing and economic hardship on the rise, a brutally uneven and needlessly slow recovery will be all but guaranteed unless more fiscal support is delivered immediately.
The Trump Administration Was Ruining The Pre
- Long before the COVID-19 pandemic the Trump administration was squandering the pockets of strength in the American economy it had inherited.
- Broad-based prosperity requires strength on the supply, demand, and distributive sides of the economy, and Trump administration policies were either weak or outright damaging on these fronts.
- Demand: Most of the Trump tax cuts went to already-rich corporations and households, who tend to save rather than spend most of any extra dollar theyre given.
- Supply: Business investment plummeted under the Trump administration, despite their lavishing tax cuts on corporate business.
- Distribution: The Trump administration undercut labor standards and rules that can buttress workers bargaining power.
You dont have to be an economist to know how the U.S. economy is doing today: Its an utter shambles, with tens of millions of workers unable to find the work they need to get by, and with tens of millions of families facing extreme hardship and anxiety. These terrible conditions are mostly the result of the failure to manage and contain the COVID-19 outbreak, and the failure to appropriately respond in the economic policymaking realm.
President Trump, however, clearly wants voters to see the COVID-19 outbreak and fallout as nobodys fault, and further wants to be graded on how the economy was doing pre-COVID-19. This is obviously absurd the administration didnt cause COVID-19, but it is responsible for the botched response to it.
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We Have A Massive Jobs Crisis
Having only recouped just overhalf of the record 22 million jobs lost in March and April, the economy is still down nearly 11 million jobs since February an even deeper hole than the nearly 9 million jobs lost during the Great Recession. Yet filling this enormous gap is becoming more difficult amid rising business closures and slowing job growth. The number of jobs added in September was less than half the number added in August: if gains continued at the September pace, it would take us nearly a year and a half to return to February employment levels and more than 2 years to return to our pre-pandemic trajectory.
As payroll employment has slowed, the number of workers permanentlylaid offhas steadily crept up toward Great Recession levels, while many have left the labor force altogether. Nearly 900,000 women four times the number of men left the workforce in September alone, threatening to erode years of progress in narrowing gender pay and employment gaps. In total, 4.4 million people have left the labor force since February. Even for those Americans currently working, millions have seen cuts to their hours and pay, and millionsmore are not working from home and may be risking their health on the job.
Income And Wealth Inequality
The New York Times editorial board characterized the tax bill as both a consequence and a cause of income and wealth inequality: “Most Americans know that the Republican tax bill will widen economic inequality by lavishing breaks on corporations and the wealthy while taking benefits away from the poor and the middle class. What many may not realize is that growing inequality helped create the bill in the first place. As a smaller and smaller group of people cornered an ever-larger share of the nation’s wealth, so too did they gain an ever-larger share of political power. They became, in effect, kingmakers the tax bill is a natural consequence of their long effort to bend American politics to serve their interests.” The corporate tax rate was 48% in the 1970s and is 21% under the Act. The top individual rate was 70% in the 1970s and is 37% under the Act. Despite these large cuts, incomes for the working class have stagnated and workers now pay a larger share of the pre-tax income in payroll taxes.
The share of income going to the top 1% has doubled, from 10% to 20%, since the pre-1980 period, while the share of wealth owned by the top 1% has risen from around 25% to 42%. Despite President Trump promising to address those left behind, the Tax Cuts and Jobs Act would make inequality far worse:
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Economic Hardship Is Elevated Across The Country
Amid this wobbly recovery, millions of Americans are still struggling to meet their basic needs. The CARES Acts core supports notably the weekly $600 unemployment insurance supplement and the one-time Economic Impact Payments cushioned consumer spending and enabled jobless workers to stow away a small amount of savings. But after Republicans allowed the UI supplement to expire in July, and continue to block new relief, these reserves are largely depleted. Consequently:
Us 2020 Election: The Economy Under Trump In Six Charts
Claim: President Trump says he built the greatest ever US economy prior to the coronavirus outbreak and that now it’s recovering faster than ever.
Reality Check verdict: It’s true the economy was doing well prior to the pandemic – continuing a trend which began during the Obama administration – but there have been periods when it was much stronger.
The US economy was then hit by the biggest economic contraction ever recorded as a result of the pandemic. It has since bounced back strongly, but hasn’t regained all its losses.
We’ve looked at the economy in six key charts.
The latest numbers show economic output surged by an annualised 33% in the third quarter of 2020, following a record fall as a consequence of the coronavirus pandemic.
The recovery, although strong, hasn’t yet brought economic activity back to pre-pandemic levels.
Mr Trump has said the recent recovery in growth is “the biggest in the history of our country by almost triple…that’s bigger than any nation”.
Yes, it is the biggest quarterly increase, but by more like double – outdoing the previous peak of 16.7% in the first quarter of 1950.
However, Mr Trump’s comparison with other countries isn’t right. From July to September this year, the economy grew by 7.4% in the US . This is less than Germany, Italy and the eurozone as a whole.
During his first three years in office, President Trump oversaw an annual average growth of 2.5%.
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