Now That He's President, Trump Is Sounding More Positive About The Economy

Aug 9, 2017
Originally published on August 10, 2017 6:48 am

When Donald Trump was running for president last year, he never failed to portray the U.S. economy in the direst terms, with sky-high jobless rates, an anemic manufacturing sector and huge trade deficits as far as the eye could see.

"Look, our country is stagnant. We've lost our jobs. We've lost our businesses. We're not making things anymore, relatively speaking," he said during one of the presidential debates.

What a difference an election makes.

These days, President Trump sees a lot to like in the U.S. economy and frequently cites positive statistics to make the case that things are getting better.

"Prosperity is coming back to our shores, because we're putting American workers and families first," Trump said in his weekly address to the nation on Saturday. "We continue to see incredible results."

Not only is the Dow Jones industrial average hitting records on a regular basis, breaking 22,000 for the first time last week, but also the U.S. economy grew at an annual rate of 2.6 percent in the second quarter of this year, he notes.

"Economic growth has surged to 2.6 percent nationwide. You have to understand what that means. Nobody thought that number was going to happen," Trump told an audience in West Virginia on Thursday.

He has even changed his tune on the job market.

During the campaign, Trump frequently derided the monthly jobless rate put out by the Bureau of Labor Statistics, saying it didn't reflect the number of people who had given up looking for work and thus were technically out of the labor market. The true unemployment rate was much higher, perhaps as much as 42 percent, he said.

When Fox News host Bill O'Reilly noted that the jobless rate fell to 4.9 percent in February 2016, Trump replied, "These are phony numbers put out by politicians to make them look good. When you hear 5 percent and 4.9 percent, it's not the right number."

These days, however, Trump seems to like the BLS numbers just fine. In his weekly address, Trump cited the fact that the unemployment rate fell to 4.3 percent in July.

"Since our election, we've added more than 1 million new jobs, and the good news keeps pouring in," Trump said in West Virginia.

But how true is the notion that the U.S. economy has suddenly turned a corner?

Douglas Holtz-Eakin, president of the American Action Forum, says some good things are happening these days, such as the surge in stock prices. Holtz-Eakin, who served under both Bush administrations and was an adviser to Arizona Sen. John McCain, likes Trump's focus on deregulation, which he thinks could help businesses.

But Holtz-Eakin says that on the whole, the economy isn't really performing all that much differently than it has in the recent past.

"By and large, we still have the same strengths. We continue to see the unemployment rate fall. We continue to see jobs created. We continue to have the same weaknesses. We don't see wages rising rapidly enough to greatly raise the standard of living," he says.

It's true that consumers and businesses are expressing more confidence in the economy. But so far there is no evidence they are spending any more than they were last year, he notes.

As for Trump's claims about the unanticipated second-quarter growth rate of 2.6 percent? That's about average these days. The economy grew by 2.2 percent during the same quarter last year, and it actually reached 2.9 percent for all of 2015, when Trump said the economy was in such dismal shape.

It is true that stock prices have been rising steadily since Trump's election, with the Dow up more than 20 percent. But economists disagree about what is behind the increase.

And even if the economy was doing a lot better, it's not clear how much credit Trump could take. So far most of the items on his agenda, such as repealing the Affordable Care Act and overhauling the tax code, have been stalled in Congress and don't seem likely to go anywhere anytime soon.

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AILSA CHANG, HOST:

Donald Trump won the presidency last year in part by promising to revitalize the U.S. economy. After nearly seven months in office, Trump says the economy is surging. And there are signs of improvement in the stock market and the unemployment rate. But by other metrics, progress is pretty slow. NPR's Jim Zarroli reports.

JIM ZARROLI, BYLINE: Throughout his campaign, candidate Trump painted a gloomy picture of the economy. Here he was in a debate with Democrat Hillary Clinton.

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PRESIDENT DONALD TRUMP: Look. Our country is stagnant. We've lost our jobs. We've lost our businesses. We're not making things anymore, relatively speaking.

ZARROLI: At the time, the unemployment rate had been falling for years, dipping below 5 percent in early 2016. But Trump said the Labor Department numbers were fake.

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TRUMP: These are phony numbers put up by politicians to make them look good. When you hear 5 percent, then 4.9 percent, it's not the right number.

ZARROLI: The real unemployment rate, Trump said, was much higher than the government claimed.

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TRUMP: The number isn't reflective. I've seen numbers of 24 percent. I actually saw a number of 42 percent unemployment - 42 percent.

ZARROLI: Trump noted that the unemployment rate only includes people searching for work. It doesn't include all those people who've grown discouraged and quit looking. That's a point made by a lot of people, including Vermont Senator Bernie Sanders, though few of them think the real unemployment rate is as high as 42 percent.

These days, however, Trump seems to like the Labor Department's numbers a lot more than he used to.

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TRUMP: We continue to see incredible results.

ZARROLI: In his weekly address on Saturday, the president boasted that the unemployment rate in July fell to 4.3 percent.

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TRUMP: Prosperity is coming back to our shores because we're putting America workers and families first.

ZARROLI: Seven months into an administration is probably too soon to judge whether a president's economic policies are working, especially for a White House that has struggled to get its agenda off the ground. But so far, at least, Trump's claims of a resurgent U.S. economy don't really square with the data. Economist Douglas Holtz-Eakin says for better or worse, not all that much has changed since last year.

DOUGLAS HOLTZ-EAKIN: By and large, we have the same strengths. We continue to see the unemployment rate fall. We continue to see jobs created. We continue to have the same weaknesses. We don't see wages rising rapidly enough to greatly raise the standard of living.

ZARROLI: For instance, during his address in West Virginia last week, Trump cited the increase in the growth rate during the second quarter of this year.

(SOUNDBITE OF ARCHIVED RECORDING)

TRUMP: Economic growth has surged to 2.6 percent nationwide. You have to understand what that means. Nobody thought that number was going to happen.

ZARROLI: In fact, a 2.6 percent increase in growth is only a little higher than it was in the second quarter of 2016, and it's equal to the annual growth rate of 2015. Holtz-Eakin, who served as an economist under both Bushes, says some positive things are happening. The stock market is rising faster than it did. Surveys suggest consumers are more optimistic. But, he adds...

HOLTZ-EAKIN: To my eye, that's one thing. The second thing is, do they spend more money because they're confident? And the spending really hasn't changed very much. It's going on at about the same pace it did last year.

ZARROLI: Holtz-Eakin says it's the same in the business sector. Businesses say they're more confident about growth. But so far, at least, they're not putting their money where their mouth is by investing more. If that happens, Trump's claims about the economy will be more credible. Jim Zarroli, NPR News, New York.

(SOUNDBITE OF JIZUE'S "UNNECESSARY PAIN") Transcript provided by NPR, Copyright NPR.