I wouldn’t say it was impeccable. Trump had the advantage during the start of his term of an economy that was already trending upward.
This is in contrast to the Obama administration, which had to deal with the Great Financial Crisis (GFC) or the Bush W. administration, which had to deal with the Dotcom Bubble Crash and 9/11. Unfortunately, for Trump, a crisis occurred near the end of his term versus the beginning.
People tend to forget about the GFC. The economy was experiencing what former Federal Reserve Chairman Ben Bernanke called “the worst financial crisis in global history, including the Great Depression.” In the last quarter of 2008, real GDP plummeted 8.4 percent and the economy hemorrhaged more than 1.9 million jobs.
Trump’s numbers are good, some really good, but they’re not the “greatest” like he loves to boast. There have been periods during other presidents when it was much stronger.
Job Gains
The United States experienced some of its best years of job gains in 2014 and 2015 in Obama’s second term when the economy added more than 225,000 jobs a month. Employment continued to be strong under Trump — until the pandemic hit. Average monthly job gains under Trump peaked at 193,000 in 2018.
Prior to the pandemic, President Trump claims to have delivered the lowest unemployment rate in half a century.
This is true. In February this year, the rate stood at 3.5%, the lowest for more than 50 years.
However, the Obama administration added more jobs to the economy, comparing similar time-frames.
Under Trump, in the three years prior to the pandemic, there were an additional 6.4 million jobs. In the last three years under Obama, 7 million jobs were added.
Economic Growth
Trump says he had the “greatest economy in history” during the GOP convention but it’s not true.
The economy grew just shy of 1 percent in Obama’s first term when the GFC took its toll. Growth improved to 2.3 percent in Obama’s second term. Under Trump, the economy is on track to average slightly above zero in his first term because of the sharp losses from the pandemic.
Excluding 2020, growth in Trump’s initial three years in office was 2.5 percent — slightly above Obama and well below the growth under the Clinton, Reagan and Johnson administrations.
Unemployment
The U.S. unemployment rate hit a half-century low of 3.5 percent in late 2019 and stayed around that level through February 2020. Trump frequently touted the job news, though he often left out that the unemployment rate was a fairly low when he took office (4.7 percent) and has been steadily declining since 2011.
Black Unemployment Rate
A key part of Trump’s argument is the Black unemployment rate, which hit the lowest level ever recorded — 5.4 percent — in August 2019. When Trump took office, Black unemployment was 7.5 percent. But as you can see, it was already trending downward for years. Many of the job gains under Trump did go to Black and Hispanic workers, especially women.
Poverty Rate
President Trump claimed in 2019 that he had delivered “the largest poverty reduction under any president in history”.
In 2019, around 4.2 million fewer people were living in poverty in the US compared with the previous year, according to official data.
This is a significant drop, but not the largest reduction in history.
The US Census Bureau has published this poverty data since the end of the 1950s. The largest fall in a single year was in 1966 during the administration of President Lyndon B Johnson, when almost 4.7 million people were lifted out of poverty.
The GFC and subsequent economic downturn saw sharp rises in poverty, which only began to decline from around 2015 during the Obama administration, with a growing economy and rising levels of employment.
Stock Market
If you run the numbers of the stock market close to measure market performance from Inauguration Day through Election Day for the first terms of both Trump and Obama.
Trump’s tenure was certainly a good stretch for investors: The S&P 500 index rose 45.7% over that time, for an annualized return of 10.5% a year.
But that still doesn’t come close to matching the gains seen under Barack Obama. During Obama’s first term, the S&P was up 77.4% for an annualized total return of 16.3%.
Here’s a look at average S&P 500 annual returns under the previous six U.S. presidents:
- Jimmy Carter: 6.8%
- Ronald Reagan: 9.8%
- George H.W. Bush: 12.8%
- Bill Clinton:: 15.8%
- George W. Bush:: -2.4%
- Barack Obama : 12.4%
- Donald Trump 11.8%
In his first four years in office, S&P 500 returns under Trump have been right in the middle of the pack compared to the previous six presidents.
Overall, stock market returns were highest under Clinton and H.W. Bush. Stock market returns were lowest during the second Bush presidency and the Carter administration.
Bottom Line
Trump claims credit for the strong economy, saying that he inherited a “disaster” from Obama and that he “accomplished an economic turnaround of historic proportions.”
However, the truth is that by the time he became president, the economy largely had recovered from the
GFC and was nearing full strength.
It is clear that Trump inherited a strong economy that was still trending upward when he entered
office. Those trends continued…until the pandemic hit.
