WASHINGTON – Despite promising growth as high as 6%, President Donald Trump presided over an economy that grew at just 1.9% in the third quarter — a figure that Trump said signaled an economy “in deep trouble” when it happened under his predecessor.
The Commerce Department report released Wednesday was the second of the past four indicating a growth rate below 2%. That will likely result in an overall growth rate of under 2% for all of 2019, the year before Trump runs for reelection.
As it stands, Trump’s growth rate in 2019 has averaged 2.33%, which is slightly lower than former President Barack Obama’s 2.37% average during the four years of his second term, according to a HuffPost analysis of Commerce Department data.
“The king gets more naked every day,” said Joe Walsh, a former congressman from Illinois who is now running against Trump for the 2020 Republican presidential nomination.
“It’s sadly revealing that Donald Trump is now touting the same quarterly growth number he attacked our administration for experiencing during the recovery,” said Andrew Bates, spokesman for the Democratic presidential campaign of former Vice President Joe Biden. “Donald Trump, on the other hand, inherited a strong economy from us, the same way he’s obtained everything in his life, and is now squandering it.”
The announcement of the slowing economy on Wednesday led the Federal Reserve Board to cut a key interest rate by another quarter percentage point, its third such reduction this year. While chairman Jerome Powell said the economy can continue to expand with low unemployment and low inflation, “our views about the path of interest rates that will best achieve these outcomes have changed significantly over the past year.”
Most economists put much of the blame for the slowdown on Trump’s trade war with the rest of the world, which has increased costs to American consumers, who have paid billions of dollars in import taxes, while reducing U.S. exports to other nations because of retaliatory tariffs. American manufacturers and farmers have been particularly hard hit.
White House spokesman Judd Deere, though, stuck to Trump’s pattern of blaming Powell and the Federal Reserve Board. “Despite seven interest rate increases since President Trump took office and a global recession, this president’s policies of lower taxes, deregulation, and fair and reciprocal trade have supported the longest economic recovery in U.S. history with record low unemployment and rising wages,” Deere said.
But for a president who has been counting on a strong economy to overcome his personal unpopularity with wide swaths of the electorate, the numbers beneath Wednesday’s top-line summary are even more ominous.
Business investment, an indicator of how those closest to hiring and purchasing are feeling about the future, was down for the second straight quarter: 3% less in the July through September period than April through June, which itself saw a 1% reduction compared to January through March.
“No matter how you calculate, it’s definitely a slowdown,” said Ben Herzon, director of U.S. economics at IHS Markit. He said while the 1.9% growth figure was slightly higher than expected, he believes some of the underlying factors that caused that bump last quarter — higher than expected federal government spending and businesses increasing inventory — will fall and therefore reduce growth in the fourth quarter.
“We lowered our forecast of fourth-quarter GDP growth by 0.3 percentage points to 1.7% based on these developments,” he said.
Trump did not speak to the news media on Wednesday, but did proclaim, via Twitter, “The Greatest Economy in American History!” about an hour before the public release of the gross domestic product numbers.
That assertion is not true. There have been multiple periods of time when the economy grew faster: during the terms of Ronald Reagan and Bill Clinton, as well as after World War II. Reagan saw an average growth rate of 3.5% over his two terms, while Clinton had 3.9%. The eight years spanning the terms of John F. Kennedy and Lyndon Johnson in the 1960s had an average GDP growth rate of 4.95%.
George W. Bush had an average growth rate of 2.5% in his first term, but only 1.3% his second term, after the economy collapsed into a deep recession that lasted through Obama’s first year in office.
Unlike Obama, Trump began with a relatively strong economy, notwithstanding his frequent but unfounded statements that it was “headed the wrong way” and about to collapse.
Trump’s first year in office saw an average growth rate of 2.8%. That fell to 2.5% in 2018, despite a large tax cut that left corporations flush with cash. Over the past four quarters, the rate has been an average of just 2.03%.
Those figures are in stark contrast to what Trump promised, both as a candidate and then as the sitting president.
“We will have in my opinion a minimum 4% growth,” Trump told Fox News in October 2015. “And I think we could even have a 6% growth.”
“We’re going to have a tremendous GDP. It’s going to be maybe 4% and it could even be higher than that,” he told an Ohio television station a year later.
And Trump returned to the 6% claim in December 2017, during a Cabinet meeting. “This is far beyond what anybody thought it would be at,” he said about recently released figures that showed a 3.2% quarterly growth rate. “I see no reason why we don’t go to 4, 5 and even 6%.”
Jared Bernstein, once the top economist for Biden, said the 6% boast was never remotely possible.
“That was meaningless, Trumpian nonsense. More germane is his administration’s official economic projections of 3% real GDP growth as far as the eye can see,” Bernstein said. “That was also unfounded, as it was partly based on fantasies of their tax cuts stimulating investment. In other words, trickle-down fairy dust that once again has failed to deliver.”