Claims and Actual Policies – Calculating The Trump Effect One Year InNovember 09, 17
One of President Trump's biggest claims during his election campaign last year was that he would give the American economy a big boost. He would create lots more jobs and citizens would enjoy a much higher standard of living as growth easily surpassed that seen during the terms in office of his predecessor.
Exactly a year since his somewhat surprise victory, it seems like a good time to check what's been happening in the world's biggest economy, and one that accounts for 50 percent of global diamond and jewelry sales.
Perhaps the biggest "success" relates to the performance of US stock markets. Stock market indices are up sharply since 8 November 2016, with the benchmark S&P 500 index of the top 500 American companies up around 22 percent over the past year. In money terms, that translates into rise in value of around $4 trillion, and that's certainly nothing to be sneezed at since a lot of workers' pension funds will have grown nicely.
Can President Trump legitimately take credit for the rise, however? The idea that it is due to him and his economic policies is somewhat difficult to argue. For one thing, European stock markets have also increased strongly during the same timeframe, with the German economy performing well.
Next, there are jobs. Here again Trump claims to have had a positive effect on employment. Although last month's job figures were strong – at well over 200,000 – the US economy has added an average of 167,000 new positions every month as the unemployment rate has edged down to 4.1 percent. Undoubtedly a more than reasonable job-creating record, it’s actually lower than the average monthly jobs figure of 185,000 since the US came out of recession in 2010, however.
Not only that, but – as with the stock market – how much credit can Trump claim given that he only took office in late January and has yet to succeed in executing economic policy due to congressional hiccups.
Moving on to growth in Gross Domestic Product (GDP), presidential candidate Trump pledged to push US growth up to the 4 percent a year level – which was pretty ambitious since this has not been achieved on a sustained basis since the 1990s. It seemed that his main aim in making the claim was to give him something with which to bash President Obama who, despite leading an economic recovery after the disastrous financial collapse of late 2008, had been unable to push GDP growth much beyond 2 percent.
Since Trump has so far failed to implement any of his major economic policies, particularly promised tax cuts and a big boost to infrastructure spending, the GDP growth rate in 2017 seems unlikely to go beyond the kind of levels seen under Obama.
Then there is trade, where Trump promised to reduce the US current account deficit, repeatedly saying that Americans were being taken for a ride by foreigners due to bad trade deals. Relations with the Mexicans were dented even before the election took place and so far the NAFTA trade deal, which also covers Mexico, has not been ripped up and/or renegotiated.
It appears that running a country – especially one as vast and vastly important to the rest of the world from every single perspective – is far more difficult than simply picking holes in your opponent's and predecessor's proposed policies. Nonetheless, we must all hope that Trump succeeds in his economic policies for the good of the rest of the global economy.