Conventional wisdom tells us that incumbent Presidents, with a good economy, get elected to a second term. Although it is not entirely true, it is an idea believed by many, and one that may carry Trump to an additional term. As a result of this widespread belief, Trump touts his economic achievements every chance he gets. "The Trump Economy is setting records" he boasts and, in the same tweet, threatens that if he is not re-elected the market will crash. Does he have that much influence in our economy? Does any President?
First, let's talk about the major components of an economy, with the most influential ones being growth (GDP), employment, and inflation. A good economy should produce consistent growth, high rates of employment, and well-managed inflation. If any of these trends in the other direction it could spell disaster for economic stability.
Fortunately, the United States Economy has had all three components in line and has for some time now. As you can see in the following graphics, we have seen a steady rate of increase in GDP and an equally steady rate of decrease in unemployment for the past decade.
GDP over the last 10 yearsiTable.cfm
Employment over the past 10 yearsLNS14000000
In that same time, inflation has stayed fairly steady at around 2%.
If Trump has had such an impact and is responsible for "an economic turnaround of historic proportions", then where is the evidence? At what specific point, on either graph, can you see this turnaround? Where is the Trump bump? There isn't one because the turnaround happened in 2009 and Trump has done nothing more than act as a steward over a recovering economy. Obama did much of the same. The fact is, presidents, in general, do not have a large impact on the economy, at least not under normal circumstances. It is true that consumer and investor confidence can be increased by a President, positively impacting on the economy, though, both measures play only a minor role. The economy is something that the President just has to try and not screw up because, while they have little positive effect, they can have an enormous negative effect. Which we may get to see first hand if Trump doesn't win this tariff game of chicken. It will be interesting to see if he still wants to own the economy if it takes a downturn. That's the problem with claiming full responsibility for something, you have to own it in both the ups and downs.
On the way to the 2020 election, you can be sure that Trump will continue to hype our economy and take full credit for it, as long as it remains healthy. Don't buy into the rhetoric and let him convince you that he is the hero who saved the economy and the savvy businessman who's now maintaining it. It's not true, it is not his accomplishment. While he does slightly influence it, the economy is far too dynamic to attribute any one thing to its success.
