In a speech Friday at the University of Illinois, Barack Obama declared we, as a country, were a cheerless wreck.
Our society was rending itself at the seams, his carefully constructed world order was in tatters and our beloved nation was suddenly bereft of decency. All, Obama seemed to tell us, was a catastrophe.
Oh, except for the economy, he said. And that was all him.
“And by the time I left office, household income was near its all-time high, and the uninsured rate hit an all-time low, poverty rates were falling,” Obama said, according to a transcript from Vox. “I mention this just so when you hear how great the economy is doing right now, let’s just remember when this recovery started.
“I’m glad it’s continued, but when you hear about this economic miracle that’s been going on, when the job numbers come out, monthly job numbers and suddenly Republicans are saying it’s a miracle, I have to kind of remind them, actually, those job numbers are the same as they were in 2015 and 2016 and — anyway. I digress.”
Yes, yes, you do. And, I would argue, you also dissemble.
But you oughtn’t take my word for it — I’m not an economist. As it just so happens, Kevin Hassett is.
He’s also the chairman of the Council of Economic Advisers, and at Monday’s White House news briefing, he went into considerable detail about why the numbers show the former president’s decision to seek credit for Trump’s current economic success is as wrongheaded as Obama’s policies were when he was in office.
“You know, one of the hypotheses that’s been floating around about the economy lately is that the strong economy that we’re seeing is just a continuation of recent trends. And, you know, since we’re the nerds at the White House, we decided that this is a testable hypothesis,” Hassett told reporters.
“And so what we can do is we can go out and we can estimate recent trends — that is, trends that ran in the economy up to the point of the last election — and then compare the latest data to the recent trends.
“In most cases, by the way, the estimates of the trends that we present to you here are very statistically significant, as are the deviations from the trend,” Hassett said before launching into a series of slides.
(If you haven’t yet, check out the video above. It’s seven minutes long, but well worth it.)
The first was small-business optimism under the former administration against what it’s been under the current one. One look at the numbers shows a huge change for the positive under Trump.
Then Hassett moved onto business investment. Again, a similar trend.
“And I think that if anyone were to assert that the capital spending boom that we’re seeing right now was a continuation of the trend that President Trump inherited, then, well, you know, they wouldn’t get a high grade in graduate school for that assertion,” Hassett said.
Hassett went onto another key indicator: “Durable goods orders, capital goods orders — it’s a key part of the economy, and it’s one of the factors that we look at most closely because it characterizes, basically, the good-paying jobs, the jobs that affect normal Americans — blue-collar Americans,” he said.
His charts showed a “clear downward trajectory and billions of dollars” during the Obama administration, “and then that trajectory reversed itself completely when President Trump was elected.”
The trend held when you looked at “capital spending, the new plant formation that gives blue-collar workers their jobs.”
Again, a “clear downward trend going on in the growth rate of that for President Obama” turned into a “clear inflection timed almost precisely, once again, at the election,” Hassett said.
“And the notion, again, that somebody might defensively attempt to assert that this is a continuation of the trend is almost laughable,” Hassett said.
Hassett said that “another way to sort of test whether the data that I just showed you is a fair representation of what a trend looked like when President Trump was elected is just to compare it to what nonpartisan bodies were saying.”
He noted that in June of 2017, the Congressional Budget Office — “a nonpartisan agency that has a job, really, of looking at recent trends and projecting” — predicted that non-residential business investments would drop steadily throughout 2017 and remain low into 2019. Even a 2018 CBO projection of expected investment, though slightly better, was not high.
But thanks to Trump’s pro-growth policies, the economy is outperforming all expectations, which would not be happening if Trump’s boom was an outgrowth of the Obama years, Hassett said.
“And so, I would assert that if you look at the collective body of evidence, the notion that what we’re seeing right now is just a continuation of recent trends is not super-defensible,” Hassett concluded.
“And I think that — I know that we’re in a political time and passions are high. But, as geeky economists, one of the things we have to do is think ahead to what historians will think when they look back at this time. And I can promise you that economic historians will 100 percent accept the fact that there was an inflection at the election of Donald Trump, and that a whole bunch of data items started heading north.
“They will, of course, argue for a long time about why that happened,” he said.
But there can be no argument about who was making American economic policy when the American economy really took off.
It was Donald Trump and his White House — and all of Obama’s dissembling isn’t going to change that.
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