Rex Nutting

Opinion: Is Trump rocking the economy? Not really, it’s just average

Trump’s first 9 months: The economy and markets are OK, but not the greatest ever

If there’s one thing about President Donald Trump that everyone can agree on it’s this: The man sure does love to brag. According to him, everything about him is the biggest, the best, the smartest, the richest. Everything he touches is gold. He’s a perfect 10.

No president has ever bragged about the economy and the stock market more than Trump has in the past nine months. He’s particularly proud of the market’s performance, but he’s also bragged about job growth and economic growth since he was inaugurated on Jan. 20 (in front of the largest crowd ever assembled, remember.)

It’s been nine months since that day in January — a good time to grade how the stock market and the economy are doing. I’m not doing this to give Trump any credit or blame, but simply to put his boasting into context.

Also read: Why presidents shouldn’t get credit or blame for the economy

Yes, the stock market is at record levels, and has done very well since January. But how unusual are those gains? How good is job growth, compared with the past? What about gross domestic product?

At this point, we’ve got the numbers on nine months of stock-market returns, eight months of payroll growth, and two quarters of GDP growth. So I looked at how the stock market did in every nine-month period in the last 25 years (going back 12 more years to 1980 wouldn’t change the analysis very much). I looked at employment growth in every eight-month period. And I looked at GDP growth in every two-quarter period.

The charts show the results. I’ve colored in red all of the periods with better performance than what we’ve had since Trump’s inauguration, and I’ve colored all the periods with worse performance in green. All the charts end at the beginning of Trump’s term.

The stock market, as you know, is doing quite well in comparison with past periods. Since Jan. 20, the S&P 500 SPX-1.91% is up 12.8%. It’s been better than that over a nine-month period about a third of the time since 1992. The best nine-month period was between April and December 2009, when the S&P soared 46.7%. The worst period was in the nine months just before that, from July 2008 to March 2009, when it fell 43.6%.

The market was better than it is now about 46% of the time while Bill Clinton was president, 34% under Barack Obama, and 14% under George W. Bush.

The job market has also been strong, averaging 140,000 net jobs a month since January. But the better way of comparing growth is on a percentage basis over eight months — in this case, 0.8%.

Job growth has been better over an eight-month period about two-thirds of the time since 1992. It was better 97% of the time under Clinton, 73% of the time under Obama, and 37% of the time under George W. Bush.

The best job growth in the past 25 years was in the eight months between March and October 1994, when payrolls increased 2.4% (the record is 10.3% in early 1941 as the arsenal of democracy tooled up to fight World War II.) The worst period for jobs in the past 25 years was the 3.9% decline in the eight months ending in April 2009.

The economy grew at a 2.1% annual rate in the first half of the year and is expected to maintain that trend (perhaps a tick higher) for the foreseeable future. It’s grown faster than that about two-thirds of the time since 1992, but most of those faster periods were in the 1990s. The best two-quarter period was at the end of 1999, when it grew at a 6.1% pace. The worst two-quarter growth was the 6.8% decline at the end of 2008 and the beginning of 2009.

Growth was faster than the recent 2.1% growth half of the time under both Obama and Bush 43. Growth was faster 91% of the time when Clinton was president.

Read: What 10 million simulations tell us about President Trump’s chances of achieving 3% economic growth

Trump gives himself a '10' on Puerto Rico relief (1:38) President Trump met Thursday with Puerto Rico Gov. Ricardo Rossello at the White House and gave himself a "10" for the hurricane response in Puerto Rico. Photo: Getty

The conclusion of this analysis is about what you’d expect if you’ve been paying attention: Everything is good, but it’s not the greatest ever. There have been some periods in the past that recorded faster growth, more hiring and larger returns in the stock market. And some periods were worse than the recent performance.

In other words, there are bear and bull markets, and recessions and expansions. Right now, we’re in a bull market and the economy is expanding.

It’s possible this is as good as it gets in this cycle. Why?

Because the market may not be able to keep up double-digit gains. It’s relatively easy to get big gains right after a bear market, but at this point, the market is much closer to be overvalued than it is to being a bargain.

And it would be equally foolish to count on much faster growth in jobs or in GDP. It’s easiest to add lots of jobs when the unemployment rate is high and the labor force is expanding rapidly, as it did in the 1970s through 1990s when tens of millions of women joined the workforce.

Now, the demographic headwinds are against us. The working-age population is barely growing: The number of people between 25 and 54 hasn’t grown at all in 10 years (compare that to the growth of 14.5 million in that demographic during the 1990s).

The other raw ingredient of economic growth is productivity, which has been extremely weak, and no one is quite sure why. No one is certain how to boost productivity, but it will probably take more than a big tax cut.

So far, the economy and the markets are on Trump’s side. Things are good (but not the greatest ever). But nothing lasts forever, not even good times.

That shows why it’s risky for Trump to be crowing so much about the stock market and economy: They can turn on you. If Trump wants to take credit for the good times, will he be equally willing to take some of the blame when things go sour as they always do, eventually? (Rhetorical question!)

Usually, presidents’ popularity follows the economy. When things go south, people blame the guy in the White House. But Trump’s popularity is already quite low, even though the economy is fine. One big question is what would happen if the economy did sicken? Would Trump’s popularity slump as that of most presidents do? Or would his base of support continue to stick with him, no matter what?

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