Originally published in The New Yorker
By John Cassidy
The recent economic uptick can be traced not to Trump’s election but to the fact that Congress passed a huge stimulus package earlier this year—although it wasn’t advertised as such.
In the past few days, there has been a lot of partisan back-and-forth about the state of the economy, and about who is responsible for its present condition. Speaking at the University of Illinois, on Friday, shortly after the Labor Department announced that employers created another two hundred and one thousand new jobs in August, former President Barack Obama reminded his audience that “the longest streak of job creation on record” began under his watch. Obama said, “Let’s just remember when this recovery started. I’m glad it’s continued. But when you hear about this economic miracle that’s going on … actually, those job numbers are the same as they were in 2015 and 2016.”
What Obama said was accurate. During the final nineteen months of the Obama Administration, roughly four million jobs were created in the United States. In the first nineteen months of the Trump Administration, roughly 3.6 million jobs were created. Those are healthy figures so far into a cyclical upturn—the economy has been growing since the summer of 2009—but they represent a slight slowdown relative to 2013 and 2014. The fact is that economic growth was pretty modest during the first year of the Trump Administration: inflation-adjusted Gross Domestic Product, the broadest measure of the economy’s output, rose by 2.2 per cent.
On Monday, Kevin Hassett, the chairman of the Council of Economic Advisers, held a press briefing at the White House, and he didn’t mention any of these figures. Instead, he showed the assembled reporters a series of graphs illustrating various measures of small-business confidence, capital investment, and the employment-to-population ratio among prime-age workers, which all appeared to show an upward break in trend since the end of 2016. “I can guarantee you that economic historians will one hundred per cent accept that there was an inflexion point at the election of Donald Trump, and that a whole bunch of data items started heading north,” Hassett said.
We’ll have to wait for the historians’ verdict, of course. But a strong argument can be made that the recent uptick in hiring and growth can be traced not to Trump’s election, as Hassett said, but to the start of this year. The reason is straightforward: this winter, Congress passed a substantial economic-stimulus package, and what we have seen in the past few months looks like a textbook case of a stimulus giving a short-term boost to an economy that still had some human and physical resources lying idle.
