We’ve all heard him say it. “This is the greatest economy ever! Unemployment is at an all-time low. Stock market is at an all-time high. You’d be crazy not to vote for me.”
Now I will grant from the get-go that today’s economy is, in some ways, the best I’ve seen since I started work in 1968. That said, I’m not buying for a femptosecond that Trump had anything to do with it.
As Paul Krugman has said, “The stock market is NOT the economy.” Currently, about 54% of Americans own stocks, many of them indirectly in retirement funds and 401K plans that are invested in the stock market. Of that group, the upper 10% income group actively trades stocks and reap huge financial gains. 46% of Americans have no stocks at all. The stock market is generally a playground for the rich; a gambling operation that is rigged (I’ll save that for a later post).
The economy is not the stock market. The economy is the “Gross Domestic Product,” which is the sum total of all goods and services created by the American people in a year. Since our population is going up each year, you’d expect that the GDP would increase each year. In fact, that has been the case historically. A recent exception is the Bush crash of 2007 where the GDP actually went down.
President Obama inherited a crashed economy, frightening job losses, and a automobile industry on the brink of collapse. He pushed through a near trillion-dollar stimulus which reversed the Bush crash/recession, and saved GM and Chrysler with a government managed bankruptcy and bail-out. It took Obama one year to get the GDP back up to pre-Bush-Crash levels. Since then. the economy has been rolling along at a modest, but sustainable 2.5% increase in GDP. In other words, Trump has been riding the Obama wave and falsely taking credit for it.
Here’s a chart of quarterly increase of GDP since 1985; I have annotated it to show the performance of each administration.
What does this chart tell us? First, President Clinton did the best; curve fitting would put him in the 4% growth range. President Bush completely screwed up, crashing the economy, and driving the GDP growth to -8% range.
President Obama is the hero here. You can see the year it took him to restore the economy, and while his quarterly performance since has wider swings, a curve fit puts him in the 2.5% GDP growth range. Trump’s performance is just a continuation of Obama’s performance.
So the next time some MAGA cultist tells you that Trump is the savior of the economy, just reply, “Obama fixed the economy and handed Trump a stable, growing Gross Domestic Product. Thanks, Obama!”