More than anything else, the performance of the economy during the next several years is likely to determine whether Donald Trump succeeds or fails as president.
So how’s he doing? And how should we measure his success in the future?
Well, for starters, the economy has earned a solid B since Trump took office in January, according to an exclusive Trumponomics Report Card Yahoo Finance has developed to track the economy during Trump’s time in office. The reasons may be surprising: Trump has earned top marks for wage growth, for example, while manufacturing employment—a key focus for Trump—has been strong so far in his presidency. The rise of the stock market, on the other hand, hasn’t boosted the Trump economy as much as breathless financial-market headlines might suggest.
In coming months, Trump’s economic grade is likely to benefit from GDP growth, which was weak in the first quarter but is expected to bounce back strongly in the second. Job gains will buoy Trump’s grade for months, if the current pace of job growth persists. One weak spot could be exports, which are vulnerable to a rising dollar, along with trade friction. Overall, the Trump economy is off to a strong start, making it Trump’s challenge to simply manage an economy on the verge of booming—while also doing no harm.
Our Trumponomics Report Card assesses the performance of the economy on six key measures, comparing Trump’s record to that of six prior presidents at the same point in their first terms. We limited this analysis to first terms only, since that’s when most of the policy changes a new president might favor are likely to go into effect. So we measure Trump’s performance against that of Barack Obama starting in 2009, George W. Bush starting in 2001, Bill Clinton starting in 1993, George H.W. Bush starting in 1989, Ronald Reagan starting in 1981 and Jimmy Carter starting in 1977. Prior to that, the data is less consistent and in some cases unobtainable.
The blue dots in the graphic above represent the performance of the Trump economy, relative to that of the other presidents. Since we’re comparing Trump with 6 other presidents, there are 7 dots, including one for Trump and 6 for the others. The one exception is exports, because that data only goes back to 1993; so we have only three presidents to compare Trump against, or 4 dots total.
Moody’s Analytics is providing the data for the report card, and offering analysis on the current state of the economy to help explain the results. “The benefit of this tracker is whether you’re a Trump supporter or a Trump detractor, it’s not political,” says Ryan Sweet, director of real-time economics at Moody’s Analytics. “It’s very transparent. The data tells the story.” To that end, we’ve published a full explanation of our methodology for those who want to dig into the numbers.
Here’s an overview of Trump’s economic performance on the six indicators we’re following.
Employment: The economy created 522,000 new jobs in March and April, which is our starting point for measuring presidential performance on the economy. (Our methodology explains why.) That places Trump third out of the 7 presidents we’re looking at, behind Jimmy Carter in 1977 and George H.W. Bush in 1989. The Carter economy, while known for “malaise,” was actually bouncing back from a nasty recession in the mid-1970s, while the Bush economy was in the late stages of a prolonged boom. The worst performer on jobs at this point in his presidency was Obama, who inherited the worst recession since the 1930s and was down 2.2 million jobs in just his first two months.
Manufacturing employment. Trump has decried the loss of manufacturing jobs, yet employers created 41,000 of them in March and April, giving Trump better marks at this stage than the other presidents, except for Carter and Reagan.
Average hourly earnings. This is the real surprise of the Trumponomics Report Card, given that earnings growth has been the single-biggest missing piece of a recovery that began in 2009. But the labor market was tightening up just as Trump took office, with a shortage of workers in some sectors and regions pushing wages up. This seems likely to continue and perhaps intensify, with wages rising even faster during the next couple of years.
Exports. They’re down under Trump so far, but they were down more under Obama and George W. Bush at the same point in their presidencies. They rose at the beginning of Clinton’s first term, which was before the North American Free Trade Agreement went into effect.
The S&P 500 stock index. It rose sharply in the weeks following Election Day last November, but that is not reflected in our report card, which uses Trump’s first full month in office—February—as a baseline from which to measure future gains. (Again, our methodology explains why.) Since February, stock-market gains have been modest, with Trump ranking third out of the 7 presidents. This might seem to represent a bias against Trump in the way we measure his performance on the economy, but the same methodology will benefit him in other ways, as on GDP growth.
Real GDP per capita. This is a big-picture measure of economic growth, relative to the size of the population. This is the only indicator in our report card that’s released quarterly rather than monthly, and we won’t have relevant data until the government publishes second-quarter numbers in late July. But Trump is likely to score well. First-quarter GDP growth was a weak 0.7%, but we don’t assess Trump on that number—we only use it as a baseline against which to measure future growth. Since second-quarter growth is forecast to be much stronger—well above 3%—Trump’s grade on this measure could rank near the top.
There’s already contentious debate over how much credit Trump deserves for an economy that was gaining strength when he was elected. During Trump’s first year or so, the Trumponomics grade will largely reflect conditions as the new president found them when he entered the White House. As his tenure progresses, however, the grade will become all Trump’s. “Presidents inherit economies,” says Sweet. “But within 6 to 12 months, this will become the Trump economy.”
We’ll maintain the Trumponomics Report Card throughout the Trump presidency, and update it several times per month, as new data comes in. When there are meaningful changes, we’ll highlight them with fresh news coverage on Yahoo Finance. We also plan to add more features to the report card, allowing users to plumb the economic data for each president. We hope this project helps our audience better evaluate the Trump presidency, and generate thoughtful discussion of Trump’s policies and effectiveness. Please share your insights in the comments section below, or reach out to us on Twitter or Facebook.
Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman. He’s reachable at email@example.com.