Market Pulse: Economic facts, pre and post covid
During this election season there is a debate about who can best administer the economic recovery. Polls often favor Donald Trump on the economy, but his claim that the pre-covid economy was the best is U.S. history is overstated. From 1964 through 1966 economic growth remained above 5.8%, a level we haven’t seen in nearly 40 years. Here are the statistics on our economy without the hyperbole. Draw your own conclusions.
• The unemployment rate fell to 3.5% at the end of 2019, lower than what economists thought was the natural unemployment rate. That was a pleasant surprise that brought many people out of poverty.
• Job growth averaged 2.6 million jobs annually during Barack Obama’s second term and 2.2 million a year in Trump’s first three years.
• Under the Obama presidency, gross domestic product grew at an annual rate of 2.25%. Under Trump, it grew 2.5%.
• Government spending grew faster during the Trump years than it did under Obama.
• Debt grew under Obama, debt grew under Trump. Will our country ever worry about debt?
• The U.S. economy is expected to contract 4.3% in 2020. That’s better than most European countries but worse than Taiwan and South Korea. Only China is expected to grow in 2020.
• The budget deficit as a share of gross domestic product is higher in the U.S. than nearly every other developed market economy. Someday we’ll pay a big price for this.
The economy under Obama and Trump faced a headwind of declining birth rates and retiring Baby Boomers. That headwind will restrain the economy during the next administration as well.
Trump and Obama may often disagree with each other, but the one thing they share is the longest expansion in U.S. history. The expansion, which ended in March, beat the prior 120-month record from March 1991 to March 2001. Thanks covid.
David Vomund is an Incline Village-based Independent Investment Adviser. Information is found at http://www.VomundInvestments.com or by calling 775-832-8555. Clients hold the positions mentioned in this article. Past performance does not guarantee future results. Consult your financial advisor before purchasing any security.
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