After eight years of blaming America’s problems on George W. Bush, the press that got the election wrong is rolling out a new line – that President Obama is handing President-elect Donald Trump a booming economy. That takes some brass.
The jobless rate is down to 4.6 percent, and the growth rate is up above 2 percent or even 3 percent, with housing prices getting back to pre-recession levels. Stocks are soaring. So the idea seems to be that Obama has solved the problem in the nick of time.
“Obama’s gift to Trump” is the headline on CNN. “Trump inherits healthy economy” is the way the Financial Times is headlining the yarn. Politico reckons that Trump is being handed an “Obama boom.”
Plus, the Economist magazine is out this week with a cover featuring George Washington’s image from the greenback. Except that he’s shirtless, with his arms crossed and biceps bulging, and the headline says “The mighty dollar.”
These geniuses remind me of Mark Twain trying to palm off the idea that “Wagner’s music is better than it sounds.” If the economy is so all-fired ducky, how come Americans just tossed out the party that’s claiming credit for it?
The truth is that the Obama years have been among America’s worst for the economy. His eight years will go down in history as the Great Recession, even though for much, even most, of the span, we weren’t technically in a recession.
It just felt that way. And no wonder. Obama’s is the only modern presidency that failed to show a single year of growth above 3 percent, a point Trump stressed during the campaign (and that was conceded even by the Web site Politifact).
Plus, the Obama economy failed to prosper even though the Federal Reserve had its pedal to the metal. Its quantitative easing, $2 trillion balance-sheet expansion and zero-interest-rate policy all produced zilch.
Except for pumping up Wall Street and producing what Trump calls a “false economy.” The recent declines in the unemployment rate are due less to the uptick in employed persons than to an increasing number of persons leaving the labor force.
In a “true economy” what people would boast about would be the number of employed persons rising faster than the size of an expanding workforce. In reality, the job participation rate is the lowest in decades, as millions are too discouraged to seek a job.
And the recent record Dow Jones average? It’s pumped up by the Federal Reserve. It’s nowhere near a record if the Dow is calculated in the most traditional measure of value. The gold value of the Dow peaked way back in 1999.
All this is why Bloomberg News has been reporting the “Rust Belt’s transformation into the Trump Belt.” It cites this week new research on “how bad things have become” in Michigan, Ohio, Pennsylvania and Wisconsin.
For older men in those states, Bloomberg reports, inflation-adjusted pay is below the level in – wait for it – 1979. That’s two generations lost. In those swing states the idea that Obama is handing back a booming economy will be seen there as an absurd boast.
Even if, in the last month or so, what economists call the “animal spirits” of economic activity have begun to stir. That’s because of the possibility that the credit already belongs to Trump.
Even though he’s not yet president. My own theory is that the millions of minds that make up the American electorate knew way before the pollsters that Trump was going to win this election.
They grasped that the Democrats’ high taxes and onerous regulation were drawing to an end. They’ve already begun betting that The Donald, no professional politician, will make good on his promises.
So when The New York Times runs out a headline, as it did Saturday, saying that “Obama is handing a strong economy to his successor,” it’s already behind on the story. Nice, but no cigar.
The economy is already Trump’s. And also his to lose, if he and the Republican Congress put fail to put through his promised strategic program – tax cuts, deregulation, monetary reform and a “big beautiful door” for legal immigration. That’s the only way to turn the stirrings in the stagnant Obama economy into the kind of boom that really would be – how might Twain put it? – better than it sounds.