About that economic “mess” Trump claims to have inherited
The data show that the President’s alternative facts about the economy are flat wrong
One month into the presidency of Donald Trump, it’s already common, even global, knowledge that the American commander-in-chief is a man who maintains only a passing familiarity with the truth. Hour after hour and day after day, the “alternative facts” emanating from the White House are so blatant and plentiful that it’s become difficult to keep track.
Here’s Trump, for example, speaking at a press conference last week on the state of the economy:
“To be honest, I inherited a mess. It’s a mess. At home and abroad, a mess. Jobs are pouring out of the country; you see what’s going on with all of the companies leaving our country, going to Mexico and other places, low pay, low wages, mass instability overseas, no matter where you look.”
The truth of the matter, of course, is that such a blanket characterization is utter nonsense. As even a cursory look at the numbers and the facts on the ground in scores of booming communities around the country demonstrates, the economy is in good shape in many key respects. This is not to say that there aren’t tremendous challenges or that the recovery hasn’t bypassed many areas and groups of people (like parts of rural North Carolina), but on the whole, the United States is vastly better off than it was when Barack Obama took office in 2009.
The Financial Times put it this way just a few days before Trump’s inauguration:
“Donald Trump will enter the White House presiding over one of the stronger US economies any president has inherited in recent history.”
And this is from the researchers at the website “Politifact”:
“By the time Obama was inaugurated in 2009, the unemployment rate had spiked from 5 percent to 7.8 percent, on its way to 10 percent a few months later. A rising tide of middle-class families were losing homes, turning to food stamps and seeking government-sponsored health care for the first time.
Yet Obama handed Trump the reins of an economy with a 4.7 percent unemployment rate; 75 consecutive months of job growth; rising stock prices, home values, corporate profits and consumer confidence; low inflation; and, following several years of sluggish income growth, a record spike in middle-class incomes.”
Actual – as opposed to “alternative” – facts about the economy
Still not convinced? Well then check out the following rather remarkable facts presented last month, at an NC Policy Watch Crucial Conversation luncheon by Dr. William Spriggs, chief economist for the national AFL-CIO (click here to see Spriggs’ PowerPoint slides):
The U.S. is in the midst of a record job growth streak – When Barack Obama took office eight years ago, the U.S. economy was in a freefall. The economy was hemorrhaging several hundred thousand jobs per month. By early 2010, however, that disastrous pattern had been reversed. Since that time – a period of seven years – job growth has continued unabated. This is more than three years longer than the next closest period of such success.
The lion’s share of job growth has been in full-time work – Despite the claims made by some critics that job growth has been all about part-time jobs, the data show otherwise. Since 2009, the national net growth in part-time work has been minimal. Today there are just a few hundred thousand more part-time workers than there were in 2009. Meanwhile full-time job growth has marched steadily upward so that there are now roughly14 million more such positions than eight years ago.
Wages for average workers have grown significantly and at a quickening pace – From 1980 to 2007, real hourly wages for U.S. workers in private sector, nonsupervisory jobs grew at a rate of 0.1% per year. Meanwhile, during the last four years of the Obama presidency, these wages grew at a rate of 1.3% per year or 13 times faster. What’s more, wage growth during the Obama recovery was much faster than under any of the other five economic recoveries since 1973 and widespread across an array of industries. By comparison, wage growth under the George W. Bush recovery (March 2001 to December 2007) was much slower in virtually all industries.
Unemployment is down significantly – After spiking at around 10% at the end of 2009, U.S. unemployment has dropped steadily and repeatedly over the past seven years. It stood at 4.8% last month. What’s more, similar trends apply to the numbers of Americans who are involuntarily working part-time and those who have become “discouraged,’ where rates have returned to their pre-recession numbers. These encouraging developments apply to all racial and ethnic groups.
Incomes have finally started trending upwards – even for lower-income Americans – This is one of the most encouraging accomplishment from the Obama years. After decades of being tilted dramatically toward the top, household income took an extremely positive turn in 2014-15. Not only was income growth prevalent amongst all income groups, the biggest spikes took place at the bottom, where households in the bottom 10% saw their incomes rise by 7.9% while those in the top 5% realized income growth of 3.7%.
Now add to all this encouraging news the fact that the number of Americans lacking health insurance (and the fear and insecurity that comes with it) has plummeted in recent years and Trump’s claims about a “mess” are rendered all the more inaccurate and ridiculous.
An ironic truth: Why the good news hasn’t produced more optimism
So, given all of these encouraging data, why don’t more Americans feel better about where things stand? Trump is clearly lying, but he’s also clearly tapping into something that a lot of people sense notwithstanding the data. Why is this?
The answer according to Dr. Spriggs, is also apparent in the data. Despite the progress of the Obama years, there is still a very long way to go. Though worker productivity has gone up significantly and steadily since World War II, for instance, worker incomes stopped tracking these gains in the late 1970’s.
And, of course, there is also the longstanding phenomenon of the rich consistently getting richer. Spriggs notes that the U.S. stopped being a “middle class country” back in 1986 when the middle 60% of households stopped controlling more than half of the national income. Since the late 1970’s, incomes of Americans in the top 10% and top 5% grew dramatically while the middle stagnated. And since 2000, the growth has generally been limited to the top 5%.
Add to this the rising cost of higher education and the slowed growth in college completion rates (the U.S. fell from first to 19th in this category among 28 leading economies from 1995 to 2012) and it’s not hard to see why the pessimism that gripped the country over the last few decades has been tough to shake.
Of course, the perverse irony of all this is that, while Trump may be skilled at exploiting public fears, his plans for addressing them mostly amount to the precise opposite of those President Obama so successfully employed (and of what is actually needed). Indeed, virtually every domestic economic proposal that Trump has proposed thus far (save for a boost in public infrastructure spending that is probably a longshot with the GOP Congress) is predicated on trickledown economic theories of tax cuts for profitable corporations and the wealthy combined with a disinvestment in the social safety net and the public structures and systems that make the market economy work for everyone.
The bottom line: Donald Trump says the American economy is a mess and he’s going to “make it great again.” The truth, however, is that it’s already comparatively healthy and improving. What’s more, his policies, if implemented, are almost certain to bring this good news to an abrupt halt.
Now that will be a genuine mess for someone to inherit.
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