President Donald Trump and his economic advisers want recognition for their 20 months in the White House.
The White House on Monday extended its argument that the strong economic growth underway across the U.S. is its own — not a trend that began years ago under former President Barack Obama.
The latest assertion, in a lengthy appearance during the White House press briefing by Council of Economic Advisers Chairman Kevin Hassett, contradicted the conclusions of most mainstream economists and appeared to signal that the Trump White House feels a strong economy isn’t sufficient reason to vote Republican in the midterms unless it creates a contrast with Obama.
Hassett denied his appearance was prompted by a Friday speech in which Obama said, “When you hear how great the economy’s doing right now, let’s just remember when this recovery started.” The current economic expansion began in mid-2009, six months into Obama’s first term.
Trump replied shortly afterward at an appearance in Fargo, N.D.: “He was trying to take credit for this incredible thing that’s happening. … It wasn’t him.”
The dispute goes to the heart of Trump’s arguments this fall. Facing ugly projections for a GOP rout, the president is trying to persuade voters to stick with Republicans by arguing they’ve delivered an economic turnaround. But many major gauges on economic growth and job growth were just as strong during parts of the Obama years, even without Trump‘s deregulation and deficit-boosting tax cuts.
“One of the hypotheses that’s been floating around,” Hassett said in the briefing, “is that the strong economy that we’re seeing is just a continuation of recent trends.” But “economic historians will 100 percent accept the fact that there was an inflection at the election of Donald Trump, and that a whole bunch of data items started heading north.”
Hassett made his case against the Obama economy in a series of charts that were also posted online, including measures of small-business optimism and business investment.
The charts showed capital investment to have declined by various measures during the second half of Obama’s second term and then to have abruptly increased after Trump’s election. A former Obama administration official countered that capital investment is rising globally, making it doubtful that it can be attributed to U.S government policy.
The former official also puzzled over the charts’ presentation of data as a series of six-quarter averages rather than by the usual measure of a month, a quarter or a year. “They form-shopped what they were doing,” this person said.
Hassett conceded, however, that Trump erred earlier in the day when he tweeted, “The GDP Rate (4.2%) is higher than the Unemployment Rate (3.9%) for the first time in over 100 years!”
“What is true is that it’s the highest in 10 years,” Hassett said, noting, “I don’t run the council of Twitter advisers.”
What no one disputes is that under both presidents, unemployment fell and wages grew slowly. In a further sign that the Trump administration feels the lily of strong economic growth needs gilding, Hassett released a report last week recalculating after-tax wage growth to 1.4 percent over the past year; according to the standard measure used by the Bureau of Labor Statistics, average wage gains have during the past year run about even with inflation. (But on Friday, BLS reported that average hourly earnings in August were up 2.9 percent over the previous year, the best monthly performance in a decade.)
Ernie Tedeschi, an economist at Evercore ISI who worked at the Treasury Department under Obama, noted that some of Hassett’s data were based on surveys of employers. “I agree with Hassett that there does seem to have been a firming of sentiment,” he said.
But Tedeschi said that recent increases in fixed investment were driven in part by expenditures for hurricane recovery and “some one-time effects related to the tariffs.” For example, he said, a recent surge in exports may reflect U.S. companies “trying to get in before the tariffs took effect.”
Read more here: Trump fights to wrest credit for the economy from Obama