Armchair Macroeconomics

Economics is so multivariate, so complex, that propagandists can probably find data to support whatever conclusion they want to state. I mean, they may not be able to do so in a way that will convince economists. But they will be able to convince the rest of us.

So when POTUS claims that our economy is the best its ever been, it’s easy to slip into cherry-picking data to support or contradict the claim. Wouldn’t it be better, then, to decide on the metrics used to evaluate it before looking at the data. We could then assess whether the initial claim is true. And then if it’s true, we can look to identify what actions he’s taken that would impact those metrics.

So let me suggest five metrics that should reflect the health of the economy:

• GDP Growth rate (ideally, will be flat or increasing over time)
• Unemployment rate (ideally, will be low or at least decreasing over time)
• Debt-to-GDP (should be flat or decreasing over time)
• Balance of Trade (deficits should be decreasing)
• Federal revenues (Tax revenues should increase with anything purporting to be a stimulus)

GDP Growth Rate looks like it is pretty consistent, with the 3 outliers being 2008, 2009, and 2010. One could argue that the first two were continuing a trend, and 2010 is an odd exception. Either way, this is neither a good nor a bad metric for Trump.

Unemployment? Likewise, at best Trump continued the trend of the prior years. At worst, he either neared an asymptote or started to undo prior benefits. I’d argue this is a marginally unfavorable reflection on the last 3 years.

Debt-to-GDP: This looks bad, especially in light of the 2015 improvement, and the “Cut-cut-cut” Tax act stimulus.

It looks like trade wars aren’t all that easy to win. Maybe this will get better over time, but at first blush, it looks like we’re doing worse than we have in a long time. [Trade Deficit]

As far as tax revenues go, Trump doesn’t look to have done much other than continue the prior trend. So, nothing to criticize, and nothing to praise.

The conclusion, then, is that the economy since Trump took office is certainly not improved, and likely is slightly worse than before, especially as regards the balance of trade. What do you think?