When Donald Trump took office the economy was still in need of stimulus; he delivered it. But his protectionism has done great damage
says Americans should re-elect him because of his record on the economy. Before covid-19, America enjoyed its lowest unemployment rate in 50 years, fast annual wage growth of almost 5% among the lowest-paid workers and a buoyant stockmarket. Mr Trump attributes all this to his three-pronged strategy of tax cuts, deregulation and confrontational trade policy, and says more of the same will revive the economy after the pandemic. Many voters agree.
Trumponomics has not achieved what its proponents forecast. While campaigning in 2016 Mr Trump predicted economic growth of 4% or more; in office the target was cut to 3%. Between the start of 2017 and the end of 2019 America grew by an annual average of 2.5%, barely faster than the 2.4% growth of the three preceding years. The Trump administration argued that tax cuts would pay for themselves and that cutting red tape for business would spur investment.
What was exceptional about America’s pre-pandemic economy was not, therefore, its supply side, nor even its jobs boom, which was replicated across the rich world. It was that as global economic growth slowed sharply in 2018 and 2019, America’s growth fell only relatively gently . That was because it was temporarily propped up by a bigger budget deficit. Mr Trump can take some satisfaction from his pump-priming.
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