To hear President Trump tell the story, the U.S. economy is booming, at least where it counts. To him, it’s really all about manufacturing— particularly heavy manufacturing— and it’s an emphasis meant to appeal to union workers in industries like steel, oil, and mining, particularly in the Upper Midwest. Trump, who lost the popular vote by roughly 2.7 million, managed to eke out an electoral college victory thanks to extremely narrow wins in Wisconsin, Pennsylvania, and Michigan. Trump knows that if he can’t win those states in 2020, his chances of re-election dwindle significantly.
So, to him, it’s all about keeping union workers happy in these basic industries, or at least telling them that they’re happy, and better off under his trade and economic policies.
But as with most things Trump, the hype in this case falls short of the facts. By the measures that Trump himself set for success, his economic record is actually disappointing.
Take that trade gap that came up in every Trump speech back in 2016. It was, in his telling, all the fault of “stupid” leaders who didn’t know how to negotiate a trade deal that actually worked for America. Back in 2016, under the Obama administration, the U.S. ran a trade deficit of $502 billion. That trade gap just made America poorer, according to Trump.
As president, he promised he’d fix it. He said he’d slap tariffs on Chinese products to stem the flow of Chinese exports into U.S. ports. And Chinese imports here have slowed by about eight percent. But U.S. exports to China have fallen 30 percent at the same time, which is why our trade deficit with China is now worse than it’s ever been. In 2018, the trade gap with China, alone, hit a whopping $419.2 billion, according to the Commerce Department.
Trump’s tariffs are actually hurting manufacturing in the U.S., as it’s pushed up the prices of raw materials at the plant, making American-made goods more expensive, particularly in the export market.
Far from all that “winning” that Trump promised, the trade gap spiked to $566 billion in his first year in office and it rose to $621 billion in 2018. This year, it’s even worse, with some of the monthly trade gaps setting new records. The trade gap could easily push $700 billion this year when the books are all in.
By Trump’s own metric, his trade policies have been a disaster.
Oh, but the jobs! To hear Trump tell the story, entire industries have been rescued under his watch. Just last week, at a rally in Pennsylvania, Trump repeated his claim that the U.S. steel industry was “dead,” when he took office, and that only his “big brain” has managed to rescue the dying industry.
Again, the numbers tell a different story. It’s a good thing he wasn’t speaking next door in Ohio last week, since the number of jobs in Ohio’s steel sector have actually declined from the 7,800 workers employed in that “dead” industry as of December 2016, to 7,700 these days thanks to Trump’s “revival.”
Closer to home, jobs in the related taconite industry have remained mostly flat, and overall Minnesota job numbers in the “mining and logging” category show total jobs are actually down from their most recent peak of 7,400 in April of 2015, to 6,800 in May of this year.
The industry did experience a downturn in the second half of 2015, mostly as demand for steel dropped with the collapse of oil prices, and that created a mini-recession in the steel sector. For several years, the boom in fracking had increased demand for steel pipe and related fixtures and that had boosted employment in the industry. When oil prices collapsed in 2015, major new investment in fracking infrastructure fell sharply and it pushed much of the nation’s heavy industry into a significant downturn. While job numbers rebounded in 2016, Trump was able to play off the lingering frustration of some union workers to eke out a victory in the Rust Belt.
Here in Minnesota, there were 6,600 workers in the mining and logging sector as of December 2016, according to state jobs data. Since then, the numbers have bounced up and down within a narrow range, between 6,500 and 6,800. In other words, take out the monthly noise in the data, and job numbers in mining and logging in Minnesota have been flat under Trump, and remain well below where the industry was as recently as four years ago.
And the outlook is hardly rosy. Trump’s tariffs against the world strategy appears to be laying the groundwork for a global recession. Europe already appears to be in recession while the latest numbers from China show the slowest growth in nearly two decades.
In Trump’s zero-sum worldview that may be seen as a victory, but the fallout is affecting the U.S. economy as well. Industrial production was flat in June and actually dipped in July, signaling that the U.S. is hardly immune to the chaos that Trump’s policies have created globally. And the U.S. manufacturing sector appears to be in recession already after two straight quarters of decline.
Trump promised his massive tax cut for corporations would boost business investment and spark GDP growth, but business investment has actually been declining in recent months and was lackluster at best even in the immediate aftermath of the corporate tax cuts. GDP growth bumped up modestly in 2018 as a result of the tax cut sugar high, but it’s likely to finish 2019 at around two percent, or exactly where it was when he took office. Meanwhile, he’s reduced American farmers to welfare dependents and significantly hurt rural economies in the heartland. Ask a farmer or implement dealer if they’re tired of “winning” yet.
Like most everything Trump does, it’s really all about the show. He’s a carnival barker at heart, constantly pimping for the cameras and the crowds, all the while hoping that the circus keeps the public from actually looking at the disconnect between his promises and reality. Remember that federal budget deficit he was going to eliminate? His tax cuts and over-the-top spending on the military have pushed the federal budget deficit to the highest level we’ve ever experienced outside a major war or recession, and well above the deficits experienced through all but the first two years of the Obama administration, when the country was climbing out of the Great Recession. When the fiscal year ends this October, the deficit is expected to top a trillion dollars. That’s nearly twice what is was in the last full year of the Obama administration
I recognize that some folks simply choose to believe, without question, the Trumpian rah-rah on the economy. And yes, the economy was strong during the first two years of his presidency. But Trump is like the proverbial man, born on third base, who thinks he just hit a triple. He inherited the strongest economy in a generation. Had he done absolutely nothing as president, the economy would likely be stronger today.
Trump won election attacking past leadership and making big promises. By his own measures of success, he’s making prior presidents look awfully good by comparison.