US economy under Trump: The greatest ever?

Claim: President Trump often says the US economy is on an historic high, perhaps the greatest it’s ever been.

Speaking at his State of the Union address in February, he reinforced those claims by hailing his pro-growth policies which he says have helped Americans with jobs and wages.

Reality Check verdict: It’s true the economy has been doing well – but there have been periods when it was even stronger.

And the trade war with China, rising tensions in the Middle East and fears over the health of the global economy have unsettled markets at various points, and led the US central bank, the Federal Reserve, to lower interest rates.

President Trump has repeatedly tweeted that the current US economy is the greatest in American history.

What do the figures show?

The annual rate of growth in GDP – the value of goods and services in the economy – has generally been strong.

For 2019, the data shows an annual average growth of 2.3%, ending the year at 2.1% for the fourth quarter.

This is significantly less than the 5.5% peak achieved in the second quarter of 2014 during the Obama presidency.

And if you go further back, there were times in the 1950s and 1960s when GDP growth was even higher.

“If you choose to look at the health of the economy based on GDP, Mr Trump’s claims are suspect when compared to the national economic boom of the post-War years,” says Megan Black, assistant professor of history at the London School of Economics.

Stock market soars… then wobbles

President Trump has also highlighted the rising value of US financial markets – in particular the Dow Jones Industrial Average, which follows the shares of 30 major US companies.

It’s true the Dow reached record highs under his administration. Mr Trump’s supporters argue that his corporation tax cuts along with his US-focused policies, his clampdown on bureaucracy and his promises of infrastructure investment have all helped.

The index was highly volatile at times during 2019, reflecting worries about the trade confrontation with China, and a gloomier outlook for the global economy.

But it’s begun 2020 by notching up more gains with investors apparently positive about growth prospects.

Jobs and wages

So, what’s happening with employment and wages?

In his State of the Union address, President Trump said unemployment was at its lowest for half a century. He also said that since his election, seven million more Americans were now on the employment roll.

In January this year, the unemployment rate was 3.6%. It was more than fifty years ago, in December 1969, when the unemployment rate was lower at 3.5%.

As for the numbers in employment, almost seven million more people were recorded as employed in January this year than when Mr Trump was elected in November 2016.

However, this figure takes into account the final months of the Obama presidency. Since Mr Trump took office in January 2017, 6.7 million jobs have been added.

President Trump also highlighted record low levels of unemployment amongst specific groups.

“The unemployment rate for African Americans, Hispanic Americans and Asian Americans has reached the lowest levels in history,” he said.

The African American and Hispanic American unemployment rate hit 5.5% and 3.9% respectively in September 2019 – the lowest rates recorded since the US Labor Department started collecting these statistics in the 1970s.

For Asian Americans, records only go back to 2003. These show the unemployment rate was the lowest ever recorded in June 2019 at 2.1%.

In all these groups, unemployment levels had been decreasing throughout the Obama years, after peaking around 2009.

President Trump also told Congress in his State of the Union speech that “wages are rising fast” and “incomes are soaring.”

Average hourly earnings growth did continue throughout 2019, by 3.1% on average – a generally upward trend which began during President Obama’s administration.

But that’s not the whole story.

After inflation is taken into account, real wages increased by 0.6% in December 2019, and peaked at 1.9% in February under President Trump, according to official data.

This is lower than the real wage increases of more than 2% that President Obama oversaw in 2015.

Household income has also been growing – but the rate of increase has slowed in the last few years.

In 2018, median household income was $63,179, which official data says is not statistically different from the previous year.

This was reported to be the first year it had barely moved after three years of growth.