Let’s start with the obvious:
1. Trump’s campaign promises were absurd. He said he’d pay of the national debt in 8 years. When asked how, he replied “trade”. Just two days ago, he again claimed that tariffs were helping to pay off the national debt. The truth is that Trump is conducting the most irresponsible fiscal policy in all of American history. Because neither the Dems or the GOP are willing to cut spending, Trump’s deficit spending will lead to much higher taxes and slower growth in the future. But that’s not Trump’s problem.
2. Trump’s claim that he reduced the unemployment rate from somewhere around 20% or 40% to 4%, almost overnight, doesn’t even pass the laugh test.
3. Trump is making the trade deficit “worse”, the exact opposite of his promise.
4. Job growth is no better than under Obama.
5. He promised 4% RGDP growth, we have 2.7% so far.
So if the economy was as awful under Obama as he claimed during the campaign, then it’s still very bad. However, if we look past Trump’s silly promises, there is some evidence of economic improvement:
The growth rate of 2.7% over the past 6 quarters exceeds the 2.1% average during the Obama recovery. On the other hand, growth averaged 3.0% during 8 quarters from 2013:Q2 to 2015:Q2, and GOP supply-siders were not lauding that achievement at the time. Thus the recent surge is clearly not statistically significant.
On the other, other hand, I do think the recent tax changes have boosted growth. I had expected growth to slow as we approached full employment. It was slowing in 2016. We don’t have RGDP futures markets, but I’m pretty sure that growth has been higher than was expected 2 years ago. Stocks responded as if the tax bill was pro-growth. The unemployment rate fell by more than expected. And I’d expect above trend growth to continue for a few more quarters, before slowing sharply during 2019. So on balance, there is some evidence of an improved economy.
To summarize:
The hyperbolic claims of the Trumpistas are laughable. We are still recovering in much the same way as under Obama, just a bit faster. Claims that the U-3 unemployment rate were meaningless and that the true unemployment rate was anywhere from 20% to 40%, have been quietly shelved. Like everything else with Trump, his economic claims are deeply dishonest, even by the standards of American political discourse. (Commenters occasionally tell me that other politicians say things like, “I’ll pay off the entire national debt in 8 years through trade.” False, other politicians don’t say things like that.)
It’s far too soon to make any overall judgments about the effects of Trump policies. Throughout history, governments tend not to end well when led by demagogues that rely on continual, non-stop lying, fake news, demonizing foreigners and minorities, seeking “enemies” in the media and anyone else who dares to disagree, and no respect for the rule of law. Indeed I know of no such government in all of human history that ended well. Maybe Trump will be an exception, but let’s wait and see before making that judgment.
PS. Off topic, the decision to remove Trump’s star from the Hollywood Walk of Fame was a mistake. Trump is even more famous than when his star was first placed on the sidewalk. Yes, he’s a bad person, but so are lots of other famous people with stars on the pavement. More importantly, this decision is a win for the vandals, and will encourage more vandalism in the future. Incentives matter.