President donald trump says Americans should re-elect him because of his record on the economy. Before covid-19, America enjoyed its lowest unemployment rate in 50 years, fast annual wage growth of almost 5% among the lowest-paid workers and a buoyant stockmarket. Mr Trump attributes all this to his three-pronged strategy of tax cuts, deregulation and confrontational trade policy, and says more of the same will revive the economy after the pandemic. Many voters agree. The economy is one issue where Mr Trump does not face a big deficit in the polls.
Yet his administration’s economic record from before the pandemic is mixed. It got one thing right: when Mr Trump took office the economy was still in need of stimulus, which tax cuts and more spending helped provide. But that success has also helped conceal the damage done by his protectionism.
Trumponomics has not achieved what its proponents forecast. While campaigning in 2016 Mr Trump predicted economic growth of 4% or more; in office the target was cut to 3%. Between the start of 2017 and the end of 2019 America grew by an annual average of 2.5%, barely faster than the 2.4% growth of the three preceding years. The Trump administration argued that tax cuts would pay for themselves and that cutting red tape for business would spur investment. In reality the budget deficit rose from 4.4% to 6.3% of gdp, on the imf’s measure, and although deregulation did help boost business confidence there was no sustained jump in investment growth.