As he has done with the property business built up by his father, Trump has squandered the economic inheritance from Obama by poor management.
With his failure at handling the pandemic, and manifest personality flaws, President Trump is basing his claim for re-election on economic issues. He shamelessly trumpeted the September quarter rise in US real GDP as ‘the highest in American history’. The increase was 7.4 per cent, which Americans like to ‘annualise’ as 33 per cent. But it did not even make up for the drop in the June quarter. As a new daily record of almost 100,000 new Covid-19 cases was recorded on Friday, the December quarter is not looking promising.
US real GDP for the year 2020 is likely to be not much larger than it was in 2016. This makes Trump the first president since Herbert Hoover (1928-1932) not to increase real GDP significantly during their term in office. Under Trump the Chinese economy is now larger than the US, and the gap is forecast to widen. He is also ending his term as president with an unemployment rate around 8 per cent, having inherited a rate below 5 per cent.
Nor has Trump made much progress on his own stated economic goals of bringing back manufacturing jobs or narrowing the trade deficit with China. There are slightly fewer workers employed in manufacturing than there had been when Trump was inaugurated. The balance of payments data show that the overall trade deficit has averaged $48 billion a month under Trump compared to $43 billion under Obama. Looking just at the balance with China, the deficit has also been larger under Trump than Obama.
Trump’s economic policies have been bad for the US. His corporate tax cuts do not appear to have generated any surge in real business investment. His trade war with China is estimated by Moody’s to have cost 300,000 US jobs. The IMF estimated it had cut 0.6 per cent off US GDP. His climate delusionism will increase the costs from global heating and leave US enterprises with stranded assets and outmoded technology.
He has certainly made the US ‘grate’ again. The decline in the regard in which the US is held around the world reduces US ‘soft power’ and economic prospects in areas such as education and tourism.
Trump’s apologists will blame the economic carnage on the coronavirus. But the extent of the havoc it has wreaked was not inevitable. Policy and leadership matters. New Zealand has had five deaths per million people while the US has had almost 700.
As he has done with the property business built up by his father, Trump has squandered the economic inheritance from Obama by poor management. He well deserves his ranking among presidential experts (in the Siena College Research Institute survey) as the worst economic manager of the last century.
Dr John Hawkins is a senior lecturer in the Canberra School of Politics, Economics and Society at the University of Canberra.