Relax – the economy can't actually save Trump in 2020

The American people aren't as easily fooled as Trump might like, and the numbers tell a very different story to his crowing tweets

Trump's supporters want him to be as good with the country's money as they think he was with business money. Sadly, the numbers show he's not that great with either (Jim Lo Scalzo/EPA)

The move was already afoot to declare President Donald Trump the economic wizard in office that his backers, if not his bankers, thought he was in the private sector — even before today’s report showing the US unemployment rate at a 50-year low of 3.6 per cent. Needless to say, that clamor from the usual suspects was repeated once the report hit, even though the details of the data are fairly average, and Trump’s influence on them somewhere between small and none.

Nonetheless, persistent claims of a “new boom” are the heart of the case for electing the 72-year old Trump to a second term next year, and are central to a nagging suspicion among US elites that the president may have one more Houdini-like escape from trouble left in him.

Too bad there is no boom. And the American people — most of them anyway — are likely to be smart enough to figure that out well before the election.

In fact, the jobs report simply continued a series of economic trends that began well before Trump took office in 2017. The growth of 263,000 jobs in April — a healthy number by any reckoning — did little more than offset a weak February, leaving the three-month average at a pedestrian 183,000. No boom there. Wage growth was lower than in the last two months, and no higher than it was in the last expansion that ended in 2007.

Similarly, for all of Trump’s talk of an investment-led growth boom, growth in GDP has also been little better than in 2014 or most of 2015 — before a hiccup caused by the flurry of worries about China’s debt load cut into US exports. This isn’t a huge surprise. First, big tax cuts like Trump’s 2017 corporate-tax bill did little for investment when Ronald Reagan and George W Bush did them, too. The data don’t show any surge in investment now -- the US economy’s better-than-average growth in the first quarter of this year was about a bump upwards in exports, state and local government spending, and inventory buildups, none likely to be repeated soon.

Indeed, the simplest numbers of all for non-experts like most US voters to digest are the unemployment rate, how fast jobs are being added, and the inflation rate. None of these are unusually good for Trump.

Yes, the unemployment rate is very low — but the 1.1-percentage-point drop since Trump took office 27 months ago is less than the drop in 2013 alone and the same as in 2014. Annualized, it’s half as fast.

Americans are used to falling unemployment now — it’s regarded as due recovery from the mess that followed the 2008 financial crisis, which cost the country 9 million jobs in what seemed like no time at all. If unemployment stopped falling, that would be a huge political problem.

Similarly, inflation is bouncing around 2 per cent — last year the consumer price index rose 1.9 per cent, including food and energy — and that’s no better than it has been through the last decade either. Real median household incomes, which took a 10 per cent hit between 2007 and 2011, recovered all of their losses by 2017 and have continued to rise without accelerating. Rumors of a tight jobs market that boosts pay sharply have proven exaggerated, and consumer confidence is high but declining slightly, according to surveys by the University of Michigan and the Conference Board.

The challenge for voters will be to decide whether Trump — who spends days ranting on Twitter about Russia, trade or immigration — is somehow transmogrified into the stable genius of his own imaginings when he turns to manage the economy.

Sure. If you believe that, we’ve got a Trump University degree to sell you. Indeed, one reason the economy and the stock market are strong as they are is that Trump muted his harsh rhetoric because markets often tanked when he threatened tariffs.

More likely, 2020 will feature Americans breaking into their now-familiar tribes, with the Blue team allocating credit for unemployment — which Barclays thinks may reach 3 per cent by then — to trends established under former President Barack Obama, and the Red team crediting Trump.

That leaves the election to be decided on culture issues — immigration chief among them — just as Trump wanted in 2016. And he can sell that to an electorate younger and more non-white than that which rejected him in the popular vote, hoping to replicate the electoral college tightrope walk that put him in office under even tougher conditions.

Tim Mullaney writes an economics column for MarketWatch.com, part of The Wall Street Journal Digital network