President Donald Trump at a campaign rally in Green Bay, Wisc., April 27, 2019. (Yuri Gripas/Reuters)

How to think about the Trump-era economy?

Begin with a reminder that Americans’ beliefs about the relationship between presidents and the performance of the national economy are largely superstitious. Politicians encourage this superstitious belief. But there is a lot more to GDP growth and the labor market than the character or intelligence of the president, and the changes in federal policy from one president to the next are not necessarily the major factors driving economic change. This cannot be overemphasized. But that is not to say that specific policies, e.g., an incompetently executed trade war, do not have consequences.


That being written . . .

The wage and employment data have been very encouraging. If Trump is going to run on the economy in 2020, that’s what he is going to run on. That’s the good news, and it’s not good news for Trump alone.

Conversely, Trump has failed on other fronts as measured by his own criteria. Remember those promises about sustained 3-percent growth? So far, that hasn’t happened, and it does not appear likely to. Growth has been in fact around 2 percent—and slowing.


The trade deficit, one of Trump’s big bugaboos, is larger today than it was when he took office, rather than smaller, as he promised. Reducing the trade deficit was never the right policy (most people, including President Trump, do not seem to understand what it is the trade deficit actually represents) but that is the metric Trump chose.


The deficit that does matter — the federal budget deficit — is on the rise.

Many of the same gold-plated “populists” who mocked Barack Obama for pointing to the performance of the stock market as an indicator of economic strength are now doing the same thing. That’s a tricky thing to bet your credibility on.

The fundamental question is this: If the economy is really doing as well as Trump and his allies claim, then why does it need constant goosing from the Fed (“Quantitative easing? Who, us?”) and trillion-dollar budget deficits to keep the party going?

So far, no one has offered a plausible explanation of that.