AP FACT CHECK: Trump’s ‘historic’ and mostly false economic gains claims
President makes some mystifying assertions that are incorrect, misleading or false.
WASHINGTON — President Donald Trump exaggerated his role in boosting US economic growth, falsely claiming full credit for positive economic news and inaccurately declaring a “historic” turnaround.
The statements capped a week of mystifying assertion in which Trump also invented history by saying he won the women’s vote in the 2016 election, saw progress with North Korea that isn’t evident to his top diplomat and boasted of “success” and “record business” in US health care programs that have yet to start.
Here’s a look at his economic and trade claims:
TRUMP: “We’ve accomplished an economic turnaround of historic proportions.” – remarks July 27 on a new economic report.
THE FACTS: That doesn’t square with the record. Trump didn’t inherit a fixer-upper economy.
The US economy just entered its 10th year of growth, a recovery that began under President Barack Obama, who inherited the Great Recession. The data show that the falling unemployment rate and gains in home values reflect the duration of the recovery, rather than any major changes made since 2017 by the Trump administration.
While Trump praised the 4.1% annual growth rate in the second quarter, it exceeded that level four times during the Obama presidency. But quarterly figures are volatile and strength in one quarter can be reversed in the next. While Obama never achieved the 3% annual growth that Trump hopes to see, he came close. The economy grew 2.9% in 2015.
The economy faces two significant structural drags that could keep growth closer to 2% than 3%: an aging population, which means fewer people are working and more are retired, and weak productivity growth, which means that those who are working aren’t increasing their output as quickly as in the past.
Both of those factors are largely beyond Trump’s control.
TRUMP: “One of the biggest wins in the report, and it is, indeed a big one, is that the trade deficit – very dear to my heart because we’ve been ripped off by the world – has dropped.”
THE FACTS: Trump is correct that a lower trade deficit helped growth in the April-June quarter, but it’s not necessarily for a positive reason.
The president has floated plans to impose import taxes on hundreds of billions of dollars of foreign goods, which has led to the risk of retaliatory tariffs by foreign companies on US goods.
This threat of an escalating trade war has led many companies to increase their levels of trade before any tariffs hit, causing the temporary boost in exports being celebrated by Trump.
Richard Moody, chief economist at Regions Financial, said the result is that the gains from trade in the second quarter will not be repeated.
TRUMP: “We’re having the best economy we’ve ever had in the history of our country.” – remarks July 26 in Granite City, Ill.
THE FACTS: This is not the best the US economy has ever been.
The unemployment rate is near a 40-year low and growth is solid, but by many measures the current economy trails other periods in US history. Average hourly pay, before adjusting for inflation, is rising at about a 2.5% annual rate, below the 4% level reached in the late 1990s when the unemployment rate was as low as it is now.
Pay was growing even faster in the late 1960s, when the jobless rate remained below 4% for nearly four years. And economic growth topped 4 per cent for three full years from 1998 through 2000, an annual rate it hasn’t touched since.
TRUMP: “The Canadians, you have a totally closed market … they have a 375% tax on dairy products, other than that it’s wonderful to deal. And we have a very big deficit with Canada, a trade deficit.” – remarks Thursday in Peosta, Iowa.
THE FACTS: No, it’s not closed. Because of the North American Free Trade Agreement, Canada’s market is almost totally open to the United States. Each country has a few products that are still largely protected, such as dairy in Canada and sugar in the United States.
Trump also repeated his claim that the U.S. has a trade deficit with Canada, but that is true only in goods. When services are included, such as insurance, tourism, and engineering, the U.S. had a $2.8 billion surplus with Canada last year.
TRUMP: “Veterans’ unemployment has fallen to the lowest level in almost 18 years. … And I’ll guarantee, within a month or two months, that 18 will be even a much higher number.” – remarks Tuesday at VFW convention.
THE FACTS: This boast is based on outdated numbers.
The veterans’ unemployment rate was 3.3% in June, a low rate historically, but that is still above the 2.7% rate in October, which was the lowest in nearly 17 years.
Veterans’ unemployment has fallen mostly for the same reasons that joblessness has fallen for everyone else: strong hiring and steady economic growth for the past eight years.
The vets’ unemployment rate peaked at 9.9% in January 2011, then fell by more than half to 4.5% by the time Trump was inaugurated in January 2017. Since then, it has fallen an additional 1.2 percentage points.
Trump won’t be able to get to a higher number than 18 years, as he promises to do, because the data only go back to 2000.