It’s no secret that the American economy has been through some ups and downs over the past few years. It’s been pretty volatile ever since the Great Recession of 2008. But under President Trump, the economy has been on a roller coaster ride like never before.
On the one hand, Trump has presided over some positive economic developments. For example, the Tax Cuts and Jobs Act of 2017 lowered taxes for corporations and individuals, boosting economic growth. And the stock market has reached new heights under Trump, with the Dow Jones Industrial Average surpassing 25,000 for the first time in January 2018.
But on the other hand, Trump has also presided over some significant economic challenges. The most notable is the trade war with China, which has led to higher prices for American consumers and businesses. The Trump administration has also imposed tariffs on imported goods from several other countries, raising the cost for American consumers.
And then there are the government shutdowns. The most recent one lasted 35 days in 2018-2019 and was the longest in American history. It caused major disruptions for businesses and workers across the country and cost the economy an estimated $11 billion.
Looking at the big picture, it’s clear that the American economy has been affected by Trump’s policies in both positive and negative ways. But how exactly has Trump’s presidency impacted the economy? Let’s take a closer look.
The Tax Cuts and Jobs Act of 2017
One of the most significant pieces of legislation enacted during Trump’s presidency was the Tax Cuts and Jobs Act of 2017. This law lowered taxes for corporations and individuals and was a significant victory for Trump and the Republican Party.
The tax cuts got credited with boosting economic growth. For example, in the first quarter of 2018, GDP growth reached 2.3%, its fastest pace over three years. And in the second quarter of 2018, GDP growth was even higher, at 4.2%.
The tax cuts have also helped to increase corporate profits. In the first quarter of 2018, corporate profits rose by 7.3% compared to the previous year. And in the second quarter of 2018, they grew by 11.1%.
The tax cuts have been criticized by some, however, for being too tilted towards the wealthy. According to one analysis, the top 1% of earners will receive 83% of the tax cuts in 2018. And by 2027, the top 1% are projected to receive 60% of the tax cuts, while the bottom 60% of earners got projected to receive just 5%.
The China-US Trade War
The trade war with China is one of the biggest economic challenges that Trump has faced during his presidency. It began in early 2018 when Trump imposed tariffs on imported solar and washing machines. In response, China retaliated with tariffs on several American products, including pork and soybeans.
The trade war escalated in the summer of 2018 when Trump imposed tariffs on $34 billion in Chinese goods. China responded with tariffs on $34 billion worth of American goods. Trump then imposed tariffs on an additional $16 billion worth of Chinese goods, to which China responded with tariffs on $16 billion worth of American goods.
Trump escalated the trade war even further in September 2018 when he imposed tariffs on $200 billion of Chinese goods. China responded with tariffs on $60 billion worth of American goods.
In December 2018, Trump and Chinese President Xi Jinping agreed to a temporary truce in the trade war. Trump decided not to impose any new tariffs for 90 days, and China agreed to increase its purchases of American goods.
The trade war has had several adverse effects on the American economy. The most immediate impact has been higher prices for American consumers. According to one estimate, the tariffs imposed by the Trump administration will cost the average American household $800 per year.
The trade war has also led to job losses in the American economy. In September of 2018, for example, General Motors announced that it was laying off 14,000 workers due to the trade war. And in December of 2018, Stanley Black & Decker announced that it was moving production of its Dewalt power tools out of the United States to Mexico due to the tariffs.
The trade war has also harmed American businesses. Several companies got forced to cancel or delay investment plans due to the uncertainty of the trade war. And the tariffs have led to higher costs for many businesses, which has put them at a competitive disadvantage against foreign companies.
The Stock Market under Trump
The stock market has reached new heights under Trump, with the Dow Jones Industrial Average surpassing 25,000 for the first time in January 2018. The S&P 500 and Nasdaq Composite have also set new records during Trump’s presidency.
Several factors have contributed to the stock market’s strong performance under Trump. One is the corporate tax cuts enacted in the Tax Cuts and Jobs Act of 2017. The tax cuts have helped to increase corporate profits, which has led to higher stock prices.
Another factor contributing to the stock market’s strong performance under Trump is the low-interest rate environment. Interest rates have been historically low since the Great Recession of 2008 and remained low during Trump’s first year in office. The low-interest rates have made it cheaper for companies to borrow money, which has helped to fuel economic growth.
However, it’s worth noting that the stock market is not similar as the economy. The stock market is just one aspect of the economy and doesn’t always reflect the economy’s underlying health. For example, the stock market peaked in October of 2007, just before the start of the Great Recession.
Unemployment under Trump
Unemployment reached a historic low of 3.7% in September 2018 and remained at 3.7% in the following months. This is the lowest that unemployment has been since 1969.
Trump has taken credit for the low unemployment rate, and there is some evidence that his policies have helped to create jobs. For instance, the Tax Cuts and Jobs Act of 2017 got estimated to have created nearly 1 million jobs.
Trump’s policies have also helped to create jobs in the energy sector. For example, Trump’s decision to draw out from the Paris climate agreement has increased investment in the coal industry. And Trump’s decision to open up public lands for drilling and mining has increased jobs in the oil and gas industry.
However, it’s worth noting that the low unemployment rate is not entirely due to Trump’s policies. The low unemployment rate is a longer-term trend that began before Trump became president.
Wage Growth under Trump
Wage growth has been one of the most favorable economic developments during Trump’s presidency. After years of stagnation, wage growth finally began to pick up in 2015, and it has continued to increase in the years since.
Inflation-adjusted hourly wages rose 2.9% in 2018, the most significant increase since 2009. And in 2019, they are projected to grow by another 3.1%. This is good news for workers, as their paychecks are finally starting to stretch further.
Many factors have contributed to the recent increase in wage growth. One is the low unemployment rate, which has put workers in a stronger negotiating position regarding wages. Another is the Tax Cuts and Jobs Act of 2017, which has given workers more money to spend.
The Government Shutdown of 2018-2019
The government shutdown of 2018-2019 was the longest in American history, lasting 35 days. It began on December 22, 2018, when Trump refused to sign a spending bill that did not include funding for his proposed border wall. The shutdown led to significant disruptions for businesses and workers across the country, costing the economy an estimated $11 billion.
The shutdown had many adverse effects on the American economy. One was the loss of productivity. Federal workers got furloughed, meaning they were not working and not getting paid. And businesses that depended on federal workers were also affected.
Another adverse effect of the shutdown was the increased costs for businesses. Companies that got forced to close due to the shutdown lost revenue and had to pay for things like employee vacation days and temporary workers.
The shutdown also caused disruptions in many industries, including air travel, tourism, and retail. And it led to a decline in consumer confidence, as Americans became worried about the state of the economy.
The Tariffs Imposed By the Trump Administration
The Trump administration imposed tariffs on imported goods from many countries, including China, Mexico, and Canada. The tariffs have led to higher prices for American consumers and businesses, and they have also led to job losses in the American economy.
One of the most notable examples of the job losses caused by the tariffs is the case of Harley-Davidson. In June 2018, the company announced that it was moving the production of some of its motorcycles out of the United States to avoid the tariffs. This led to the loss of jobs in the United States and the gain of jobs in other countries.
The tariffs have also increased prices for many products, including cars, washing machines, and solar panels. And they have negatively affected American businesses, as companies got forced to cancel or delay investment plans due to the trade war’s uncertainty.
The National Debt under Trump
The national debt has increased significantly under Trump, rising from $19.9 trillion in January 2017 to $22.0 trillion in November 2019. This is the most significant increase in the national debt since President Obama’s first term in office.
Many factors have contributed to the increase in the national debt under Trump. One is the Tax Cuts and Jobs Act of 2017, which is estimated to have added $1.5 trillion to the deficit over ten years. Another is the increase in government spending that has occurred under Trump.
The national debt has been a source of concern for many Americans. The debt is currently more significant than the size of the economy and was projected to continue to grow in the years ahead. This could negatively affect the economy, including higher interest rates and lower growth.
Inflation under Trump
Inflation has been relatively low during Trump’s presidency, averaging 2.3% yearly. However, there have been some concerns that inflation could start to pick up in the years ahead.
One factor that could lead to higher inflation is the Trump administration’s tariffs. The tariffs have led to higher prices for several goods, which could put upward pressure on inflation.
Another factor that could lead to higher inflation is the increase in government spending that has occurred under Trump. The tax cuts enacted in the Tax Cuts and Jobs Act of 2017 have also contributed to the rise in government spending.
Inflation is the level at which prices for services and goods increase. It has been relatively low recently but has begun to tick up under the Trump administration. In 2018, the inflation rate was 2.1%, which is expected to rise to 2.3% in 2019. The rise in inflation is partly due to the tariffs the Trump administration has imposed.
The Trade Deficit under Trump
The deficit is the difference between the goods and services that the United States exports and the amount it imports. It increased from $500 billion in 2016 to $616 billion in 2018. The Trump administration has made reducing the trade deficit a key goal, but its policies have increased the debt.
This is due in part to the tariffs that have been placed on imported goods, which have reduced the number of goods that are being imported into the United States.
Overall, it’s hard to say how Trump’s policies have affected the American economy. There have been some positive effects, such as the tax cuts and the strong stock market performance, but there have also been some adverse effects, such as the government shutdown and the trade deficit. Only time will tell how Trump’s policies will ultimately impact the economy in the long run.