By many metrics, the economy is booming, and both President Trump and former President Obama want you to know that they are the one to thank.
Under Trump, the stock market hit new highs, the unemployment rate dropped to lows not seen in decades, and consumer and business confidence has soared.
“The Economy is soooo good, perhaps the best in our country’s history (remember, it’s the economy stupid!),” Trump tweeted last week, before blasting Democrats over their own economic bona fides.
But, Obama says, Trump’s achievements may not have been so significant if he hadn’t come into office with an economy that was already humming along smoothly. Obama inherited the worst recession since the 1930s, he often reminds voters, and helped turn it around.
“When you hear how great the economy is doing right now, let’s just remember when this recovery started,” Obama said in remarks at the University of Illinois last week.
So who’s right?
Economists and experts say both presidents make good points, but both are also wrong to a certain degree.
For Trump’s part, the economy certainly has accelerated since he took office.
“I definitely think that the political change had an influence,” St. Louis Federal Reserve Bank President James Bullard told reporters last week. “I think that this is a pro-business administration that wanted to pursue strategies that were focused on economic growth.”
Second quarter GDP this year grew at a robust 4.2 annualized rate, the unemployment rate held at an impressive 3.9 percent, and the number of job vacancies hit a record high.
“I do think there is something to the signalling of a Trump administration that definitely had an impact on optimism and confidence on businesses,” said Tony Fratto, who was deputy press secretary under President George W. Bush.
“If you were a business leader on Election Day looking forward to a Clinton administration, you could probably bet that more regulations were coming, and that if anything was going to happen on tax policies, there would probably be tax increases,” he added. “Looking at a Trump administration, it would be the opposite.”
But Trump’s economic policies have their critics, especially when it comes to trade relations, an area where Trump has entered a high-stakes game of tit-for-tat tariffs with major trading partners like China and the European Union.
“If you don’t see a trade war, I think what you’re going to see is a pivot point around where these policies took place,” said Wayne Winegarden, senior fellow in business and economics at the right-leaning Pacific Research Institute. “But we need time to let those policies play out.”
Trump has also been dinged for the exploding deficit and slow improvement on wage gains.
Economists also warn that the fiscal stimulus from tax cuts and increased consumer spending will be temporary, and that the growth rate will come back down.
The Fed’s Bullard said he expects the economy to return to a 2 percent annual growth rate, on par with the growth projections Obama faced.
Obama, for his part, makes strong points as well. Under his watch, quarterly GDP growth peaked higher than any quarter under Trump, reaching 5.2 percent in 2014. And while Trump inherited a strong economy from Obama, Obama took the oath of office in the midst of a global economic and financial crisis.
“President Obama came into one of the worst financial disasters we’ve had in a very long time, undoubtedly, and the economy certainly recovered during that time,” said Winegarden, adding that he thought growth during the Obama years was inhibited by regulation and taxes.
But many economists say presidents have only so much sway over the economy, and that there is an element of luck to whether the public ascribes them credit or blame for economic conditions.
One reason is that a president can’t choose the economy they inherit. Another reason is that the Federal Reserve plays an integral role by setting monetary policy, independent of which party is in power.
A third reason is that it takes a long time for policy to make its way into people’s pocketbooks.
“There are definitely enormous lags from announcement to enactment to effect and then to perceived effect,” Fratto said. “Those tend to be really, really long runways to get to that point.”
In that regard, he said, Obama’s team worked with the hand they were dealt.
“We take some blame for the crisis and maybe not recognizing it early enough, but we also take credit for taking some of the courageous steps for repairing the financial sector under very stressful, frightening economic circumstances that helped the nation recover,” Fratto said.
By the time Obama had taken the oath of office, Congress had passed the Troubled Asset Relief Program, injecting major Wall Street banks with much-needed capital to shore up confidence in the U.S. financial system. That was preceded earlier in 2008 by an economic stimulus package that put cash in the hands of consumers to help boost the economy.
“The credit goes to both Bush and Obama for their cooperation between the two administrations to continue the work to rebuild the financial sector,” Fratto said.