A Democratic sweep, however, also has potential downside risks for stocks and the economy: Biden has proposed an increase in taxes for corporations and wealthy Americans. At the same time, Jack Again, chief investment officer at Crossed Capital in Chicago, noted that Trump ’s corporate tax cuts in 2017 didn’t trickle down to boost business spending as promised.
But lower taxes and less-than-projected government revenue generation, combined with hefty federal spending especially on defense, also sharply raised the nation’s debt levels. And even with the pandemic sending the country into recession and darker days almost certainly ahead, Trump garnered an approval rating of 54% on the economy in the latest Gallup poll.
Experts say Trump ’s more favorable ratings on the economy, compared with other issues including race relations and foreign affairs, reflect in part his reputation as a businessperson, though information on his income, wealth and taxes remain largely hidden from the public. Economist Randi adds that the buoyant stock market has helped Trump ’s approval rating on the economy, although he calls it ironic.
President Trump argues the economy was soaring pre-pandemic, and he can bring it back again, while former vice president Joe Biden, the Democratic nominee, argues the nation wouldn’t be in such bad shape if Trump hadn’t fumbled the handling of the pandemic. Biden says he can get people working again and points to the Obama administration’s track record after the Great Recession.
Perhaps the best case Trump can make for improvement since he took office is higher wages and a boost in confidence. The average worker’s pay finally grew more than 3 percent a year under Trump, and there was a drop in the number of Americans on food stamps.
Consumer and business confidence also jumped after Trump ’s election and remained high after the GOP tax cuts took effect in 2018. While there’s ongoing debate about how much influence presidents really have over the economy, the charts below illustrate the trends under then-President Barack Obama and Trump.
Trump says he had the “greatest economy in history” during the GOP convention, a claim fact-checkers quickly marked as false. The economy grew just shy of 1 percent in Obama ’s first term when the Great Recession took its toll.
Under Trump, the economy is on track to average slightly above zero in his first term because of the sharp losses from the pandemic. 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.
As the labor market tightened, many employers gave a chance to workers they were not looking at before, such as those without college degrees. The pandemic, however, has hit Black and Hispanic workers the hardest, erasing many of the gains it took years to see after the Great Recession.
Economists generally credit Obama with getting the recovery solidly underway and Trump with keeping it going until the pandemic recession. The steady job and pay gains in recent years have been the biggest drivers of rising middle-class incomes.
Even with the deep blow of the pandemic that caused a 30 percent drop in stocks in March, the market has come roaring back this summer. The Standard & Poor’s 500-stock index recently surpassed its pre-pandemic record level thanks largely to surging tech stocks such as Apple, Facebook, Amazon, Netflix, Microsoft and Google’s parent, Alphabet.
Manufacturing output and jobs stalled in 2019, an early warning sign of economic trouble. In fact, some city dwellers have been rushing to the suburbs in search of bigger homes with more space.
That trend, combined with a surge in millennials buying homes and mortgage rates below 3 percent, have fueled a housing boom. The median home price in the United States hit $304,100 in July, according to the National Association of Realtors.
Spending increased under Obama as the federal government tried to revive the economy after the Great Recession, as well as fund the ongoing wars in Iraq and Afghanistan and continuing most of the Bush tax cuts. Trump ’s 2017 tax cut added about $1.5 trillion more to the debt, contrary to claims by the president’s administration that it would not.
The closely watched debt-to-GDP ratio, a sign of how big U.S. debt held by the public is relative to the economy, is on track to surpass 100 percent in the coming months. Many economists and business leaders closely watch signs of consumer confidence to see if Americans are likely to keep buying.
The two main gauges of consumer confidence are monthly surveys by the Conference Board and the University of Michigan. Both showed an increase in confidence after Trump ’s election, largely because Republicans and independent voters rated the economy more highly.
Though much of the economy under Trump looked similar to under Obama, many Americans appeared to feel better about their job and business prospects. While the economy did a big U-turn under Obama, his administration admitted that its unfinished business was seeing wages grow faster again.
When the economy is performing well, it’s usually hard for employers to find enough workers, and they start lifting pay by more than 3 percent a year. As prices rise, they tend to feel gloomier as gas costs eat into their weekly pay.
They have remained low throughout Trump ’s first term, helping keep costs manageable for many Americans. The rise and fall of gas prices are largely driven by the world market and power players like Saudi Arabia that have continued to pump cheap oil.
Trump also made it a goal to repeal the Affordable Care Act, but that has not happened in his first term. The United States has purchased more goods from abroad than it has sold for years, largely because American consumers like to shop.
In fact, a recent report from Pew Research found that about three-quarters of all registered voters said the economy was a “very important” issue for them. Touting economic achievements is nothing new for politicians, but President Donald Trump makes it no secret he believes his administration’s greatest contribution has been bringing in more wealth and prosperity for Americans.
In this case, “slightly” really means just that: Annual economic output under Trump was 2.5%, compared to 2.4% under Obama. The last three years of President Obama ’s administration saw an increase of 8.1 million jobs and a 2 percentage-point drop in the overall unemployment rate, decreasing from 6.2% in 2014 to 4.9% by the end of 2016.
It’s worth noting that when Obama took office in 2009, the country had recently lost around 8.6 million jobs due to the Great Recession. This decease is likely due in part to the rise of the gig economy ; when people are working in positions like independent contractors like Uber drivers or Postmates deliverers, they typically don’t make as much per hour as they would in a position of full-time employment.
This in turn lowers levels of disposable income, even as employment in general grows and unemployment rates decline. With less tax money coming in but similar levels of spending going out, it’s no wonder the federal deficit has increased.
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Opinions are our own and our editors and staff writers are instructed to maintain editorial integrity, but compensation along with in-depth research will determine where, how, and in what order they appear on the page. 2017 Getty Images In the Federal government’s fiscal 2020 year that is ending in three days, President Trump will have overseen a deficit exceeding $3 trillion.
These deficits put them on track for the four years that Trump has been in office to exceed the first four years that President Obama was in office when the economy was digging out of the Great Recession. Before we get into the numbers lets address the argument that Covid-19 is the reason that this year’s deficit is so large.
It should also be pointed out that the statements about how much debt was generated by Obama typically leaves out that when he entered office that the economy was in the teeth of the Great Recession, which he had no control over. The fiscal year is already four months over and their predecessor put the Federal budget in place.
It is more appropriate to look at the deficits and debt offset by at least a year, if not two, to allow a new President time to implement their programs. The numbers below include the fiscal year that Obama and Trump were inaugurated.
As noted above Obama inherited the Great Recession, while Trump has had to deal with a pandemic. If the coronavirus had not hit this year's deficit was on-track to be $1.1 trillion, per the Congressional Budget Office or CBO, which would then make Trump ’s first four years deficits total $3.5 trillion.
U.S. Treasury Department, Federal Reserve Bank of St. Louis Obama ’s two terms vs. Based on the CBO’s projections, if Trump is re-elected he will create over $11 trillion in debt.
This helps to remove the impact from a larger economy and the natural increase in financial numbers. In Obama ’s first year dealing with the Great Recession the deficit was 9.8% of GDP.