- President Donald Trump has repeatedly pointed to the nation’s steady economic health as the strongest indicator of his success, calling it “terrific” and “the greatest in the history of the country.”
- But how does his handling of the economy compare to his immediate predecessors, Barack Obama and George W. Bush?
- Presidents receive a lot of credit when the economy is performing well and a barrage of criticism when it doesn’t, despite the fact they don’t exactly wield direct power over it.
- A closer look at the Trump economy reveals a mixed picture.
- Here are 9 charts tracking the highs and lows of the Trump, Obama, and Bush economies on key indicators like gross domestic product, unemployment, wages, and the federal debt.
- Visit Business Insider’s homepage for more stories.
President Donald Trump has repeatedly pointed to the nation’s steady economic health as the strongest indicator of his success throughout his time in the White House, calling it “terrific” and “the greatest in the history of the country.”
At the World Economic Forum in Davos, Switzerland, on Tuesday, Trump credited his presidency with an unprecedented “comeback” for an economy that was in “a dismal state” when he first took office.
“The United States is in the midst of an economic boom the likes of which the world has never seen before,” he said, according to The Washington Post.
He’s also used his economic record as a shield to fend off Democratic-led impeachment proceedings that are now barreling towards a Senate trial. But how does it compare to that of his immediate predecessors, Barack Obama and George W. Bush?
Presidents receive a lot of credit when the economy is performing well and a barrage of criticism when it doesn’t, despite the fact they don’t wield direct power over it.
Any number of factors can throw it out of balance, like the dotcom bubble bursting during Bush’s first term, or the subprime mortgage crisis in the housing market that led to the Great Recession.
But a closer look at the Trump economy reveals a conflicting portrait – though it was certainly not in a poor state after the president’s 2017 inauguration. The unemployment rate is ticking downward, and job growth is holding steady – but Trump’s ongoing trade wars sapped business confidence. Companies have pulled back on hiring workers as a result.
Here are nine charts tracking the highs and lows of the Trump, Obama, and Bush economies on key indicators like gross domestic product, unemployment, wages, and the federal debt. As you can see, they paint a mixed picture around Trump’s bold claims.
Overall economic growth, as measured by quarterly GDP growth rates, has been steady.
Gross domestic product measures the total value of all goods and services provided by the country in a year, essentially the economic output. The ideal GDP growth rate is between 2% and 3%.
GDP growth was consistently strong during the George W. Bush administration, averaging out to 2.1% per year when adjusted for inflation, according to the Hudson Institute. But during the financial crisis, the US GDP plummeted and the economy contracted 2.5% in 2009.
The Obama administration confronted the worst economic crisis since the Great Depression when it initially took office. It passed a massive stimulus package in February 2009 to jumpstart the economy – and it was successful. The Congressional Budget Office said in a report that GDP growth was higher from 2009-2012 in part due to the legislation.
Trump has benefited from Obama’s economic stewardship, as GDP growth under his watch has consistently been between 2% to 3%. In 2018, it was 2.9%. Economic forecasters, however, project the nation’s steady GDP growth to decelerate in 2019, dragged down by trade tensions and slowing industries overseas.
Unemployment shot up dramatically during the financial crisis at the end of George W. Bush’s and the start of Barack Obama’s terms before steadily dropping for most of the decade.
The unemployment rate measures the share of the labor force that is jobless and it fluctuates depending on economic conditions. But when the economy is healthy and growing, it can be expected to decline.
The Federal Reserve estimates the natural rate of unemployment to range from 4.5% to 5%, which fiscal and monetary policymakers use to project full employment.
The unemployment rate hovered between 4% and 6% for most of the Bush presidency, spiking dramatically during the 2008-09 financial crisis to 7.8% just as he left office in January 2009.
As a result, Obama inherited an economy in free-fall. The unemployment rate peaked at 10.2% in October 2009 during the recession and 8.7 million jobs were lost from early 2007 and 2010, according to the Center for Budget and Policy Priorities. But it started falling steadily in 2011 and that trend continued for the rest of the Obama presidency.
President Trump took office as the economy continued its recovery – and as it underwent a decade-long expansion, the longest in American history. The current employment rate stood at 3.5% as of December 2019 – the lowest in a half-century.
Job growth, another key labor market measure, followed a similar pattern. The Great Recession destroyed millions of jobs per quarter, but the economy has steadily added around 200,000 jobs per month since President Obama’s second term.
Job growth is another key indicator of the economy’s health.
During the first few years of the Bush administration, the economy struggled adding jobs. A recession struck in 2001, which lasted eight months and shed jobs at that time. Then it bounced back – and its growth was steady until the 2008 financial crisis when jobs disappeared at a breakneck pace. In January 2009, 808,000 jobs were lost, the low point for this indicator during the Great Recession.
Obama tried stemming those job losses early on in his term, and the economy started stabilizing in 2010. They soon turned into gains – and he averaged out around 109,000 jobs created every month for eight years (when those massive losses at the outset of his presidency are also taken into account).
Job growth during the Trump presidency has largely matched its pace under Obama, fueled by a strong economy. But economists say that the president’s ongoing trade disputes with China and other major economies are taking a bite out of the jobs market and the broader economy.
Wage growth for non-supervisory and production workers in the private sector slowed down after the recession, but mostly picked up during President Trump’s first term as the labor market has tightened.
Wages tend to rise when unemployment is low and hiring is strong – and that employers are willing to pay more to attract workers.
Wage gains were steady for much of the Bush administration, fluctuating between two and four percent each year.
Then wage growth took a hit during the financial crisis, and gains were anemic for much of the Obama presidency. The Obama economic team referred to it as “the unfinished business” of his time in the Oval Office.
During the Trump presidency, wages have climbed and its grew at more than 3 percent before slowing down again. The GOP tax cuts may have boosted it, but economists also point to the tight labor market as a factor leading businesses to increase salaries to lure workers and fill open jobs.
Some economists believe that wages should be growing faster, given record lows in unemployment. They’ve proposed some possible explanations, including declining rates of unionization that stifle the ability of workers to negotiate for better pay, lack of competition within some industries, and the outsourcing of jobs to workers paid less.
The typical household’s income fell dramatically after the recession, but has recovered since Obama’s second term.
Median household income measures the average income of middle class families.
Bush’s first term saw household’s incomes trend downward because of two economic downturns, but they swung upward until 2007 before declining steeply during the Great Recession.
The recession stretched into June 2009, according to the National Bureau of Economic Research, well into the first year of the Obama presidency. The recession dealt a blow to family incomes, which struggled to recover alongside a battered economy. However, incomes started rising in 2012.
That trend has continued during Trump’s presidency. By 2018, the average middle-class family saw their income grow to $63,179, according to the Census Bureau.
The stock market hit its bottom early in Obama’s first term, and has been mostly increasing ever since, although Trump’s first term has seen a lot of volatility amid uncertainty around Trump’s trade disputes with other countries and concern that the economy may be slowing.
The S&P 500 measures the stock performance of the 500 largest corporations listed on US exchanges.
The S&P ticked upward for much of the Bush presidency, but took a severe hit during the Great Recession along with the rest of the stock market.
Obama presided over the S&P’s steady recovery, which continued through the end of his presidency.
Under Trump, that recovery has swung between gains and losses, brought on a summer 2019 recession scare coupled with the uncertainty stemming from his trade war with China.
The federal deficit ballooned in the 2009 fiscal year, as the government ramped up spending and tax revenues fell in the wake of the crisis. Deficits shrank in subsequent years, but have increased under Trump.
The federal deficit is the shortfall between federal revenue and how much the government spends in a fiscal year. When the economy is healthy, the federal deficit is expected to shrink since the government pulls back on spending and has more space to raise taxes.
Bush took over a strong economy from his predecessor, Bill Clinton, with a budget surplus of $128 billion in fiscal year 2001. And it was the last time the US government had a surplus on its hands. The wars in Iraq and Afghanistan, as well as a series of tax cuts, erased it and jacked up the deficit.
Obama ran massive deficits in his 2009 stimulus package to jolt the economy during the Great Recession. Then the next year, he passed an $858 billion tax cut that included an extension of the Bush tax cuts that had similarly ramped up deficits almost a decade before.
Trump has continued running massive deficits during his presidency, which only widened with the passage of the 2017 GOP tax cuts. The Congressional Budget Office projected the tax cuts will add $1.9 trillion to the deficit over the next decade. The deficit stood at $984 trillion for fiscal year 2019, and it will surpass $1 trillion next year, according to CBO projections.
As a result of those deficits, the total federal debt has increased over the last three presidents and is now over $23 trillion.
The federal debt is the amount of money the federal government owes. And its been on the upswing since the start of the 21st century.
The debt increased steadily under Bush, the result of a costly war on terror and the invasions of Afghanistan and Iraq. According to the Costs of War Project at Brown University, the price tag of the post-9/11 wars totaled $5.9 trillion through fiscal year 2019. The tax cuts he passed also played a role in piling more onto the debt – and it was nearly $10 trillion by the time he left office, double what it was at the start of his presidency.
Obama’s stimulus packages also added a substantial amount of money to the debt, though it helped put the nation back on track economically. According to Department of Treasury data and Congressional Budget Office projections, the national debt grew 84% under Obama’s watch by the end of fiscal year of 2016 – slightly more than it had under Bush at 75%.
Trump vowed to erase the debt during his presidency, but instead has only added to it with the GOP tax cuts and short-term spending bills.
Trade is one of Trump’s signature issues. Despite his aggressive trade moves, the total monthly trade deficit in goods and services — that is, the value of goods and services exported by the US minus the value of imports — has gotten larger in the last couple years.
The trade balance calculates a country’s exports minus its imports in a given period. When a nation imports more goods than it exports, the result would be a trade deficit.
The Bush administration’s trade imbalance increased for much of his two terms in office, partially brought on by additional trading with China as it was integrated into global markets. Then trade decreased sharply during the Great Recession.
The trade balance fluctuated but held steady during the Obama administration. And during Trump era, the deficit started to increase to levels not seen since the Bush administration – despite him vowing to “start whittling it down, and as fast as possible” in 2017. Last year, the trade deficit stood at $891 billion, according to the Bureau of Economic Analysis.
Still, a growing deficit partially means the economy is expanding, the result of increased consumer spending that leads to more imports of goods.