Evaluating Donald Trump’s Economic Record

How good or bad was the economy before the pandemic hit?

President Donald Trump is fond of boasting that he “built the greatest economy in the history of the world.” It is common for presidents to tout their economic record in the run-up to a reelection bid, but this claim has become a central element of Trump’s case to the American people. Economic management is the one issue, according to numerous public opinion polls, where he runs even with his Democratic rival. The question, then, is how US economic performance has stacked up under the Trump Administration.

The answer, it turns out, is that economic progress actually slowed a bit under President Trump — and that is even before taking into account the effects of the COVID crisis. We arrive at this answer by looking at a variety of metrics, in the hopes of capturing a holistic look at the economy, and by comparing their performance under this administration to that of the three years that preceded President Trump.

Jobs

Let’s start with something simple, but absolutely critical: jobs. Job creation slowed noticeably in the first three years of the Trump administration, compared to the last three years of the Obama administration. In the 37 months from December 2013 through January 2017, the economy added 8.2 million jobs. In the 37 months between January 2017 and February 2020, before COVID struck, the economy added 6.8 million jobs, a slowdown of an average of 38,000 jobs per month.

Again, that was before COVID. As a result of the pandemic, we lost over 22 million jobs in just two months. Since March, roughly half of those jobs came back, but there is still a hole of 10.7 million jobs relative to total employment in February. All told, the economy has lost 3.9 million jobs in the 44 months of the current Trump administration. For comparison, in the last 44 months of the Obama administration, the economy added 9.5 million jobs.

Overall Growth

Generally speaking, economists measure overall growth using gross domestic product (GDP), a broad measure of economic activity. Now, GDP doesn’t capture everything — there is a lot of valuable economic contribution that is not included — but it’s the most commonly-used measure of the overall economy. GDP growth did accelerate a tiny amount from 2017 through 2019, compared to the three years prior. From 2014 through 2016, overall annual growth averaged about 2.4 percent, after adjusting for inflation. From 2017 through 2019, overall annual growth edged up by just 0.1 percent, to 2.5 percent.

But just as with jobs, GDP came crashing down in early 2020. We experienced one of the sharpest contractions of economic activity on record In the first half of this year. On an annualized basis, the economy shrank by roughly 10 percent. As a result, all of the growth that occurred in the preceding three years was entirely wiped out. Through the first three and a half years of the Trump administration, gross domestic product shrank by a total of 3.2 percent. Over the last three and a half years of the Obama administration, the overall economy grew by a total of 9 percent.

Income

While overall GDP tells us something, it really is an abstract concept. For most people, the economy is about jobs and income, not aggregate economic activity. If they have a good job and it pays a good wage, that’s probably a good economy. So it’s important to look at how much money real people are taking home to evaluate the success or struggles of an economy.

There are lots of different ways to look at how much money people are making and bringing home in an economy. And by pretty much any of these measures, the economy under President Trump was either roughly the same as it was in the previous three years, or slightly worse. We saw noticeably slower growth in total per-capita private wages and salaries and in per-capita disposable income from 2017 through 2019, as compared with the last three years of President Obama’s term. Average hourly wages for non-supervisory workers grew ever-so-slightly faster since 2017.

Perhaps most tellingly, median family income growth was significantly lower under President Trump. In the last three years of the Obama administration, real median family income grew by about $4,750, an increase of over 9 percent, whereas in the first three years of the Trump administration, median family income grew by only $3,000, an increase of just 5.4 percent.

Racial Disparities

In a country as socially and economically stratified as ours, we really cannot accurately measure economic performance unless we turn our attention specifically to racial disparities. It is possible — common, even — for overall and average measures to mask serious differences along racial lines. Too often, we ignore or paper over those differences without really considering what they mean for the communities most impacted or for the economy as a whole. When people face persistent and consistent economic barriers, it’s an impediment to the growth and potential of the entire economy. So to fully take stock of our economic successes and failures, we need to focus on the most marginalized. There are numerous ways to look at the intersection of race and the economy, but for now, let’s examine two: a comparison of jobs and a comparison of wealth.

The unemployment rate for Black workers has been persistently well above that for white workers for as long as we’ve been keeping unemployment records. But in the final three years of President Obama’s term, the unemployment rate for Black workers declined by 4.4 points, from just under 12 percent to 7.5 percent. That decline represented a 37 percent reduction. At that point, President Trump’s term began. Three years later, before the start of the pandemic, the unemployment rate for Black workers had declined only an additional 1.7 points, to 5.8 percent, a total reduction of 23 percent from the initial level. In other words, the decline in the Black unemployment slowed markedly from 2017 through 2019.

Of course, even that small decline was entirely reversed by the onset of the recession in February 2020. Black unemployment spiked all the way up to nearly 17 percent, before receding to 12.1 by September. Accounting for the full 44 months of Trump’s term, the unemployment rate for Black workers rose by 4.6 percentage points, compared to a decline of nearly 6 points in the last 44 months of the Obama term.

In addition to the persistent disparity between white and Black unemployment rates, there is also the well-documented racial wealth gap. White households own far more wealth — in the aggregate, at the median, and on average — than Black households. One good measure of prosperity is the degree to which that gap is closing, since real prosperity is when the benefits of economic growth are broadly shared, and not siphoned off by a relatively narrow slice of the population.

From 2013 to 2016, the overall ratio of Black-owned wealth to white-owned wealth did narrow slightly. In 2013, the total amount of wealth owned by Black households amounted to just 4.4 percent of the wealth owned by white households (overall, the number of Black households is about 16–17 percent of white households), and increased to 5 percent by 2016. That progress, however, began to reverse in the first few years of the Trump administration, dropping back down to 4.8 percent, even as the share of Black households relative to white households increased.

Wellbeing and Precarity

At base, the purpose of a strong economy is to deliver real, material benefits to the broadest possible universe of people. If people feel that they are doing well and living a little bit easier, that’s a good indication that the economy is working. Conversely, if times are tight and every bump in the road is a major concern, then the economy is probably not working well. It can be difficult, however, to widely measure these kinds of relatively intangible economic facts.

Fortunately, the Federal Reserve conducts a study every three years called the Report on the Economic Wellbeing of U.S. Households, in which they ask several questions useful for illuminating this aspect of the economy. For our purposes, we are going to focus on two questions. The first is how respondents feel about their financial situation. Are they struggling or scraping by, or are they “doing ok” or even “living comfortably?” Second, the study asks respondents how they would handle a sudden, unexpected $400 emergency expense. Some households can cover that expense with cash or put in on a credit card and pay that debt off in full at the end of the month, while others simply can’t.

Both of these metrics improved substantially between 2013 and 2016, and slowed or stagnated entirely between 2016 and 2019. In 2013, 60 percent of U.S. households reported that they were “doing ok” or “living comfortably.” That percentage rose 10 points in 2016, but then rose only 5 further points by 2019. Similarly, the percent of households that could handle a $400 emergency expense (either with cash or by credit card but able to pay it off that month) rose from 66 percent in 2013 to over 80 percent in 2016. By 2019, however, that share had increased only to 81 percent.

It’s certainly true that in 2013, the economy was still very much in the early stages of the recovery from the Great Recession and as such, by these measures especially, there was likely more room to grow at the end of the Obama term than there might have been by the time President Trump took over. But even so, the slowdown was marked in both measures.

Corporations and the Stock Market

One area of the economy that did perform measurably better in the three years since President Trump took office is the corporate sector. Now, too often, we confuse the performance of the stock market and of corporations for the performance of the overall economy. And while metrics like corporate profits or the various stock indices are not meaningless, they can and do diverge from other measures like the ones we’ve examined above — which is exactly what’s happened over the last six years.

Corporations and the stock market did better under President Trump than in the last three years of the Obama term.

From 2016 to 2019, real corporate profits actually declined slightly, by just over 1 percent. The stock market, as measured by the S&P 500, grew by 24.3 percent. Under President Trump, however, corporate profits rose slightly, by 1.5 percent and the S&P 500 rose by 49 percent from inauguration day to the peak in late February.

One might be tempted to ask what purpose corporate profits and a higher stock market serve if not to improve wages, wellbeing, or stability among the vast majority of people, but that is a question for another time.

All Told

The economy is a complex thing. It is, in fact, the sum total of the billions upon billions of economic interactions we all have every day. So it is not a simple or obvious thing to measure “how it’s doing.” One could pick different metrics than the ones I have chosen and come up with a slightly different picture (or one could cherry-pick and come up with a very different picture). But a fair look at a variety of metrics leaves you with one inescapable conclusion: the Trump economy was far from “the greatest in the history of the world.” For the most part, he took over stewardship of an economy that was doing fine, but not fantastic. And it continued doing fine, albeit with perhaps a bit of decay, until the pandemic and the failed response to the pandemic stomped on it.

There are other analyses to be written on how President Trump’s specific economic policies — his tax cuts for corporations, his trade wars, his business-friendly regulations — fared, and what impact they had on the economy. And there are other arguments to be made about whether or not Trump deserves blame for what’s happened to the economy over the last eight months.

But on the narrow question of “Did President Trump build the greatest economy ever?” The answer is very clearly: no. Not even close.

Sources and methods

Jobs

Source: Bureau of Labor Statistics, total non-farm payroll employment
“Obama-Era” timeframe: December 2013 through January 2017 (37 months).
“Trump-Era” timeframe: January 2017 though February 2020 (37 months).

GDP

Source: Bureau of Economic Analysis, Real Gross Domestic Product, Billions of Chained 2012 Dollars, Quarterly, Seasonally Adjusted Annual Rat
“Obama-Era” timeframe: 4th quarter 2013 through 4th quarter 2016 (12 quarters)
“Trump-Era” timeframe: 4th quarter 2016 through 4th quarter 2019 (12 quarters)

Private wages and salaries and disposable income

Source: Bureau of Economic Analysis, Personal Income and its Disposition
“Obama-Era” timeframe: 2016 compared to 2013 (three years)
“Trump-Era” timeframe: 2019 compared to 2016 (three years)
Nominal private wages and salaries were adjusted for inflation using the same index the BEA uses to adjust disposable income and then divided by BEA’s population estimates, to arrive at real per capita values.

Average hourly earnings
Source: Bureau of Labor Statistics, Average Hourly Earnings of Production and Nonsupervisory Employees, Total Private, Dollars per Hour, Monthly, Seasonally Adjusted
“Obama-Era” timeframe: December 2013 through January 2017 (37 months).
“Trump-Era” timeframe: January 2017 though February 2020 (37 months).
Nominal average hourly earnings were adjusted for inflation using BLS’s CPI-U index.

Median Family Income
Source: Federal Reserve, Survey of Consumer Finances
“Obama-Era” timeframe: 2016 compared to 2013 (three years)
“Trump-Era” timeframe: 2019 compared to 2016 (three years)

Unemployment rate for Black workers

Souce: Bureau of Labor Statistics, Unemployment Rate — Black or African American, Percent, Monthly, Seasonally Adjusted
“Obama-Era” timeframe: December 2013 through January 2017 (37 months).
“Trump-Era” timeframe: January 2017 though February 2020 (37 months).

Wealth by race

Source: Federal Reserve, Distributional Financial Accounts
“Obama-Era” timeframe: 2016 compared to 2013 (three years)
“Trump-Era” timeframe: 2019 compared to 2016 (three years)

Wellbeing and Precarity

Source: Federal Reserve, Report on the Economic Well-Being of U.S. Households in 2013, Report on the Economic Well-Being of U.S. Households in 2016, Report on the Economic Well-Being of U.S. Households in 2019
“Obama-Era” timeframe: 2016 compared to 2013 (three years)
“Trump-Era” timeframe: 2019 compared to 2016 (three years)

Corporate Profits

Source: Bureau of Economic Analysis, Corporate Profits by Industry
“Obama-Era” timeframe: 2016 compared to 2013 (three years)
“Trump-Era” timeframe: 2019 compared to 2016 (three years)
Nominal corporate profits were adjusted for inflation using the BEA’s GDP price index.

S&P500

Source: Federal Reserve Economic Data
“Obama-Era” timeframe: December 23, 2013 through January 20, 2017 (1,124 days)
“Trump-Era” timeframe: January 20, 2017 through February 29, 2020 (1,125 days)

Budget and econ wonk. Pittsburgh native. Father of three. Aspiring to be Leslie Knope (would settle for Ben Wyatt). Personal account. Opinions my own.

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