Wayne O'Leary

Myth of the Great Trump Economy

In the wake of his debate debacle and COVID-19 diagnosis, which turned out to be the real October surprises of the presidential campaign, Donald Trump is fast running out of winning options.

The super spreader-in-chief has seen his bogus narrative that the virus is a hoax disintegrate before his eyes and the reprehensible debate tactics he counted on to discombobulate Joe Biden blow up in his face. To any objective observer, Trump has been exposed as the political charlatan he is and a national embarrassment besides.

Nevertheless, the partisan division in the country being what it is — Republican true believers in the cult of the Donald will never admit what is evident to the entire world — Trump remains a threat. Being unscrupulously willing to say or do anything gives him certain innate advantages, and our undemocratic Electoral College system still provides him an indirect, convoluted route to reelection.

Trump’s unlikely survival rests on a slender policy reed, the economy, which was performing reasonably well by some traditional measures before the pandemic (little credit to him) and is struggling to recover in fits and starts — a stunted, halting, force-fed recovery implemented at the cost of thousands of lives and millions of sick Americans. The economy is the one and only area where Trump can still compete with Biden in public favorability; a majority gave him the edge on that score until quite recently. According to Gallup, his approval rating on the economy was 63% last January; it’s now down to 48%.

Trump and the Republicans are hitting the economic theme hard, since it’s the only plus voters give them when polled. Here’s the Dear Leader himself in February’s State of the Union address: “Our economy is the best it has ever been.” He took it up a notch at August’s Republican National Convention: “We have built the strongest economy in the history of the world.” House Minority Leader Kevin McCarthy (R, Calif.) repeated that modest assertion a month later, pitching the GOP’s fall campaign promise to “rebuild the greatest economy in history.”

All of history covers a lot of ground, including the true golden era of US economic might, the 30 years or so following World War II, when Americans not only had jobs, but good unionized jobs that paid well, provided lifetime tenure, and offered fully funded pension plans instead of chancy, market-sensitive investment vehicles. Although official unemployment (pre-pandemic) had dipped to 3.5% under Trump (it’s now more than double that, at roughly 8%), few felt comfortable and secure.

In August 2019, six months prior to the pandemic, a poll commissioned by the New York Times revealed that only one-third of respondents considered themselves better off than the previous year. Many were underemployed or juggling multiple jobs in the “gig” economy, and a majority (three in five) were worried about the economic future. A mere 28% described the economy as “good,” and 38% were struggling financially. Clearly, Trump’s rising tide was not lifting all boats, and this, remember, was before the pandemic.

Since the virus struck, the bottom has fallen out of the economy. As mentioned, employment has not recovered; joblessness reached a high of 14.7% in April, worse than the 10.5% high recorded during the Great Recession. Of the 22 million jobs lost to the pandemic last spring, only 11 million have been replaced, and an estimated 12 million Americans will lose their job-based health insurance by the end of 2020. (Three million have already done so.) As of August, 30 million were still collecting unemployment benefits, with employers continuing to shed workers despite a momentary economic resurgence cynically characterized by market watchers as “a dead-cat bounce.”

Employment is not the only casualty. According to news reports, 98,000 businesses have closed permanently since the start of the downturn, while the gross domestic product (GDP) and consumer spending are falling drastically, down 9.5% and 10.1%, respectively, for the second quarter alone. Most worrisome, state governments, starved of revenue, are collectively carrying a budget shortfall projected to reach $312 billion by mid-2022, with massive cuts to health and education on the horizon. In the face of this avalanche of bad news, two-thirds of those interviewed in a recent ABC News-Washington Post poll concurred that the “great” Trump economy was in bad shape.

Giving the devil his due, President Trump can’t be held entirely responsible for the current situation, any more than Herbert Hoover can be solely blamed for the Great Depression; the pandemic would have impacted the economy no matter who was in charge. Still, Trump has made things immeasurably worse by his incompetent management. And the argument that his economic stewardship had produced unparalleled results prior to the advent of COVID-19 just doesn’t wash.

Trump inherited an economy that was already trending upward because of a decade’s worth of pent-up demand. He just redirected its rewards to the top via the 2017 tax cut. Even his claim of historically low unemployment is misleading; the unemployment rate was comparable or lower for several years in the 1940s, ‘50s and ‘60s (mostly under Democrats) — less than 2% in 1943-45 and 1952-53, for example.

Trump’s specious claim of a superlative economy is really based on two things: the purported revival of manufacturing and the ever-rising stock market. The first is demonstrably false. As of last June, the Bureau of Labor Statistics recorded 300,000 fewer factory jobs in the US than when Trump was inaugurated; their number rose slightly in 2017-18, declined in 2019, and collapsed in 2020. Statistically, American manufacturing’s period of greatness passed a generation ago; it peaked in 1979 at 20 million jobs, almost double today’s total.

In the end, Donald Trump’s greatest-economy-ever assertion rests almost entirely on the record-high stock market, his pride and joy, which mostly benefits the top 10% of households that own 84% of the value of personal stocks and the large institutional investors (banks, hedge funds, etc.) that dominate modern securities trading. Even here, Donald does not deserve the dubious credit.

As reporter Matt Phillips pointed out in a perceptive New York Times analysis (8/19/20), it was the Federal Reserve, undergirding the financial system by a policy of easy money and increased liquidity, that carried Wall Street through the Trump years, further enriching the wealthy despite the pandemic. For them, the economy really has been great.

Wayne O’Leary is a writer in Orono, Maine, specializing in political economy. He holds a doctorate in American history and is the author of two prizewinning books.

From The Progressive Populist, November 15, 2020

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