It's time to put the most persistent lie about Trump's economy to bed

Tim Mullaney
·5-min read
REUTERS
REUTERS

With Donald Trump rapidly closing in on 20,000 lies as president, he’s returning to his most-cherished lie to save his flagging re-election campaign: That he’s catnip for the stock market and the economy.

“If you want your 401(k)s and Stocks …. to disintegrate and disappear, vote for the Radical Left Do Nothing Democrats and Corrupt Joe Biden,” Trump tweeted last week. “They will make you very poor, FAST!”

It’s a truly bizarre commentary on Americans — and the press — that an image of Trump the economic wizard persists. In the Real Clear Politics polling average, 49 percent of Americans approve of his handling of the economy — which has lost 15 million jobs since February. He beat Democratic nominee-to-be Biden by nine points in a CNBC survey of who voters trust on economics, despite a poor-to-mediocre record even before coronavirus.

What might people believe about Trump’s economic wizardry if any of his plainly expensive suits actually fit? Because the only explanation for this is that people are still dazzled by his personal fortune. His record is a totally different story.

Let’s bury this (ex)urban legend once and for all, shall we? The numbers don’t lie, and they’re very consistent.

First, let’s talk about the market. Trump’s stock market record isn’t great. Charitably, it’s mediocre. By the standards of actual professional investors, it’s terrible. It certainly shows no sign of the attention the president lavishes on it, since this winter he initially diagnosed coronavirus as a threat to the Standard & Poor’s 500 index rather than the 137,000 Americans it has now killed.

Trump has had two years of solid gains (2017 and 2019), one year of losses (2018), and this year, where the S&P is little changed from 2019’s end. For 2017, he deserves little credit because he hadn’t made any policy yet. In 2018, a rally induced by his late-2017 tax cut petered out when Trump began threatening trade wars, spurring a 20 percent drop from October to Christmas Eve. This year saw a 27 percent drop between February and April Fool’s Day, still not completely recovered.

Together, the S&P has a compound annual growth rate (or CAGR) of about 10 percent since Trump’s inauguration — less than 4 percent since September 2018. For a comparable period in his first term, Barack Obama’s CAGR was 24 percent — while Biden was vice president. Bill Clinton’s two-term record was 15 percent yearly. Plus, Trump has delivered 20 percent declines in the S&P twice in the last 21 months.

Hilariously, the best way to make money under Trump is betting his policies won’t work. His ideas were supposed to help energy stocks, Ford and General Motors, and banks. Energy has tanked, GM and Ford have lost half their value (though GM has recovered some), and bank stocks haven’t moved in two years. Even defense stocks have trailed the market. Meanwhile, Amazon.com (led by bitter enemy Jeff Bezos) has nearly quadrupled.

So, Trump delivers lots of risks and mediocre rewards.

His wives could tell you that.

“The reason I put less weight on the [public] surveys is the relentlessness of the false claims of the ‘greatest economy ever,’” said hedge-fund manager Mark Dow, a former US Treasury Department official. “The repetition works.”

Next, let’s take a look at jobs.

According to the Labor Department, America gained 6.4 million private-sector jobs between Trump’s inauguration and the peak in March — and has lost 13.2 million since, even with big gains in May and June. Other than George W Bush, no president since Herbert Hoover presided over a net job loss.

Trump’s record was weak before this year, too. That erstwhile 6.4 million job gain compares to nearly 10 million in Obama’s (and Biden’s) second term, or 22 million in Clinton’s two.

Bottom line: Obama left behind 4.7 percent unemployment. The jobless rate kept falling, more slowly under Trump, then zoomed to 16 percent in April. It’s now 11.1 percent. Whatever happens by the election won’t be an improvement.

So what about growth?

Trump said he’d take an economy growing 1 percent a year (it actually averaged 2.4 percent in Obama’s last three years), and make it grow 4 percent. Sometimes he’d even promise 6 percent.

Eh, no. His best year was 2018, when 2.9 percent growth in gross domestic product matched 2014’s. His other two years have been 2.4 percent and 2.3 percent. Meh. Even that was the calm before the storm.

This year, the Federal Reserve Bank of Atlanta projects that GDP will shrink at an annual rate of 30 percent in the second quarter, after a 5 percent first-quarter drop. It may bounce back in the third quarter — everyone has expected that, until the renewed spike in Covid — but scraping back toward zero growth is no recommendation.

When a bad leader puts stocks (and jobs) under the gun, Wall Street calls that “political risk,’’ and Trump is political risk walking. He vacillates on policy, and ends up choosing unwisely. He believes fairytales about trade, public health, taxes and immigration. He talks too much, and too loosely. And he cannot think ahead.

There’s no guarantee your 401(k) will do better if Biden wins. But at least the main threat to our stock market with him at the helm won’t be the fragile ego of a leader who embodies the opposite of “large and in charge.”

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