He claims the economy is “the best it has ever been.” A closer look at the data tells a different story.
Donald Trump has been on a mission this week to distract from his impeachment by touting his administration’s economic record. First, he launched a 30-second ad after the Super Bowl promising that “the best is yet to come.” Then, in his State of the Union address Tuesday night, Trump highlighted the “American Comeback.” The speech was full of audacious—and characteristically inaccurate—claims: “our economy is the best it has ever been”; the “average unemployment rate … is lower than any administration in the history of our country”; and “wages are rising fast.”
The reality, however, doesn’t match Trump’s rhetoric. In fact, it would take much longer than a 30-second commercial to highlight the many ways that the U.S. economy isn’t working for all. Still, the moment provides an opening for Democratic presidential candidates to challenge the president’s record.
In 2019, for instance, the gap between the richest and poorest households in the United States reached its highest point in more than 50 years. The number of Americans without health insurance continues to climb following years of declines since the passage and implementation of Obamacare. And household debt is now in excess of $14 trillion, exceeding the pre-recession high.
Even with low unemployment, wage growth is lagging. The most recent employment report reported wages increasing by just 2.9 percent over the last year. With inflation at 2.1 percent, that’s not much of a pay raise. To the extent that wage growth has picked up in recent months, a major contributor has been increases in state and local minimum wages that Republicans and the president opposed.
Trump’s signature legislative accomplishment, the 2017 tax cut, has produced none of its promised benefits, including the $4,000 pay raise that he and his allies promised to American workers. In fact, as a result of the tax cut, 91 companies in the Fortune 500 paid no federal taxes last year. The country’s six biggest banks saved $32 billion at the same time that they laid off more than 1,000 employees.
The tax cut has also failed to produce the “four, five and even six percent” economic growth that Trump promised. In the fourth quarter of 2019, the GDP growth of 2.1 percent was lower than both the growth rate before the tax cut was passed in 2017 and the average of Obama’s second term (2.4 percent). Instead, the tax cuts have produced annual budget deficits of $1 trillion, which Trump has signaled may lead to cuts in Social Security and Medicare, in addition to his ongoing efforts to erode the social safety net.
Ironically, despite the president’s pledge to help the “forgotten men and women,” blue-collar job growth—which includes construction, manufacturing, and mining—remains anemic, only growing at 0.8 percent in 2019 compared to 2 percent in Obama’s final term.
What’s more, the ongoing trade war plunged the manufacturing sector into recession last year, which has stunted economic growth in states like Wisconsin and Michigan. Tensions with China produced a 24 percent increase in farm bankruptcies last year, with the most coming from Wisconsin. The Congressional Budget Office estimated recently that Trump’s trade policies will cost American households an average of $1,277 this year.
Worse yet, employers reported the highest number of layoffs in four years. For workers who are able to find new jobs, data shows they earn about 10 percent less than before. That gap is even greater for workers who were at the same job for three years or more.
But while the economic reality under Trump is troubling for most Americans overall, it’s even more daunting for African-American workers, who have an unemployment rate almost twice as high as white workers. Displaced African Americans earn 13 percent less in their new jobs. Those who were employed for three or more years earned 31 percent less in their new jobs.
Despite the headlines, too many workers are not feeling the economic boom Trump describes. Instead of making investments to provide Americans with the world-class education and training needed for 21st-century jobs, the president and the Republican Congress chose stock buybacks to benefit the wealthy and a temporary sugar high for the economy that has now worn off.
Democrats can and should challenge Trump on the economy in 2020. Millions of workers are looking for good jobs and a pay raise. Policies to build an economy for all should be central to any campaign’s message. But it’s more than just good politics. Building an economy that works for the 90 percent instead of just the top 10 percent is sound economic policy.