A Look at Economic Growth Under President Trump



The numbers behind the presidency of Donald Trump.In his song "Reminder", Jay-Z uttered the famous line:

"Men lie, women lie, numbers don't"

In the lead-up to the 2020 Presidential election, President Trump frequently boasted that he "built the greatest economy in the history of the world".

When most people look at the strength of the economy, they usually look to GDP growth on an annualized basis.

If we throw out 2020 (the Coronavirus wrecked the US economy, along with most other economies), we see that annualized GDP growth under President Trump looked like this:

2017, +2.2%
2018, +3%
2019, +2.2%

These numbers pale in comparison to other periods in US history, including:

-the late 90s (the US economy grew at least 4% for four straight years)
-the 80s (the US economy grew rapidly during Reagan's eight years in office)
-the 60s (four out of five years with GDP growth of at least 6%)

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Unemployment was very low during President Trump's first three years in office, though it was significantly lower during periods of the 1960s.

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Many people look at the strength of the stock market during President Trump's time in the White House and assume that these growth numbers translate to the economy.

Here were the returns for the S&P 500 during President Trump's time in Washington:

2017, +19.42%
2018, -6.24%
2019, +28.88%
2020, +16.26%

The fact of the matter is that economic growth could best be described as OK during President Trump's first three years in office. An average annual GDP growth of 2.5% is certainly not earth-shattering.

The gains in the stock market were due to a number of different things, including:

1. Corporate tax cut. All US-based publicly traded stocks had to be revalued higher after the corporate tax rate was slashed.

2. Buybacks. This ties in with #1 - many companies used the proceeds of their tax cuts to buy back shares of their stock, which resulted in higher prices.

3. Stimulus. What are you going to do with your money if interest rates are near zero? Buy equities.

4. Zero-commission brokerages. Companies like Robinhood made it much easier to buy stock, and many millions of people (especially millennials) decided to jump into the stock market.

5. Speculative frenzy.

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While the US economy put in some solid growth numbers during President Trump's first three years in office, the numbers pale in comparison to other periods of US history.

Filed under: General Knowledge

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