President Donald Trump rattled off several false claims in his Nov. 12 speech to the Economic Club of New York, in which he contrasted the supposedly “bleak” outlook at the end of his predecessor’s term with an exaggerated portrayal of the economy’s strong performance during his own tenure.
He said that when he was running for president in 2016 “America was stuck in a failed recovery and saddled with a bleak economic future. And it was bleak.” But as we wrote at the time he took office, “President Trump actually inherits an economy experiencing steady if unspectacular growth in output, jobs and incomes.” We noted that the economy had added 2.2 million jobs in the 12 months before Trump took office. That was later revised upward to nearly 2.5 million.
In his speech, Trump said: “Under the last administration, nearly 200,000 manufacturing jobs had been lost.” That’s true enough; the loss was 193,000. But the number of manufacturing jobs had increased by more than 900,000 between the low point early in Barack Obama’s first term and the time Trump took office. And Trump failed to mention that total employment grew by 11.6 million under Obama.
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Trump claimed that under Obama, “almost 5 million more Americans had left the labor force.” Not true. In fact, the civilian labor force grew by nearly 5.5 million under Obama.
The president said that “jobs were not exactly what you would call plentiful” under Obama. That’s also far from true. In March 2016 the number of unfilled job openings hit 6.1 million, the highest in the more than 15 years records had been kept. And when Trump took office, the number of unfilled jobs was still 5.6 million.
Trump said that in 2016, “the Department of Labor predicted that Americans would continue dropping out of the workforce in record numbers.” But that’s another falsehood. The Department of Labor’s Bureau of Labor Statistics projection for 2016-2028 (actually issued in December 2015) was that the labor force would continue to grow — though at a slower pace because the population was aging and many were reaching retirement age.
BLS said then: “The labor force is anticipated to grow by 7.9 million, reflecting an average annual growth rate of 0.5 percent, over the 2014–24 period.” And despite Trump’s bragging, that outlook for 0.5% growth hasn’t changed. The most recent BLS 10-year projection says: “The labor force is projected to increase at an annual rate of 0.5 percent from 2018 to 2028.”
Trump said that before he took office, “[T]hey expected unemployment over 5% — and, really, 6, 7, and even, in some cases, 8% — for many years to come.” Not so. The Congressional Budget Office projected in August 2016 that unemployment would fall to 4.5% in 2017, and wouldn’t exceed 5% for the following decade.
That was in line with most economic forecasts. The median projection issued Dec. 14, 2016, by Federal Reserve Board members and Federal Reserve Bank presidents was for a 4.5% unemployment rate in 2017, 2018 and 2019. And of 50 economists who offered a projection of the unemployment rate in the Wall Street Journal’s economic survey in November 2016, the average expectation was for a 4.6% unemployment rate in December 2018. Only two of the respondents thought the rate would be over 5%.
Trump claimed in his speech that “my administration has created nearly 7 million jobs, and going up rapidly.” This is exaggerated. Total employment has gone up by 6.25 million since Trump took office, well short of 7 million. As for “going up rapidly,” the average monthly gain for the most recent 12 months has been 174,000. That’s actually slower growth than during the 12 months before Trump took office, when the average monthly job gain was 207,000.
It’s true that job gains under Trump have exceeded what economists expected in 2016, but not by as much as he claimed in his speech. He said that “before I took office, the Congressional Budget Office projected that fewer than 2 million jobs would be created by this time in 2019.” And indeed, CBO’s 10-year economic projection in August 2016 was that total nonfarm employment would be 1.9 million higher in the fourth quarter of 2019 than in the fourth quarter of 2016. But Trump fails to note that CBO had revised that estimate upward just as he was taking office. On Jan. 24, 2017, it projected that the job gain would be 3.3 million.
So Trump would be justified in saying that during his tenure so far the economy produced nearly twice as many jobs as CBO predicted at the time he took office. But he was wrong to claim in his speech that the gain “beat predictions more than three times.”
Trump said: “Last year, GDP growth matched the fastest rate in more than a decade.” That’s true enough. In 2018, real (inflation-adjusted) gross domestic product increased by 2.9% over the previous year, matching the 2.9% growth in 2015, the only other time in the past 10 years growth has been that high. But growth has slowed since then to an annual rate of 1.9% in the third quarter of this year. And of course, Trump had promised to do better than merely matching the best year of Obama’s presidency. He repeatedly promised growth of 4% to 6% per year, both when he was a candidate and also as president.
Trump repeated one of his favorite talking points, claiming that median household income has gone up $5,000 during his time. But as we reported earlier, that’s a shaky claim based on estimates produced from a survey that isn’t designed to measure income. The Census Bureau’s measure of median household income increased $1,400 (after adjusting for inflation), or 2.3%, during Trump’s first two years in office. Indications are that the figure has risen further during 2019, but by how much won’t be known until September 2020, when Census is due to release the 2019 figure.
There’s no question the economy has been strong since Trump took office, but it was also strong before he took office, a fact he continues to distort as he falsely puffs up his own record.