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Steady growth to record crash: How the pandemic recast Trump's economic record

Howard Schneider
·3 min read
FILE PHOTO: U.S. President Trump disembarks from Air force One as he arrives on campaign travel in Marrietta, Georgia

By Howard Schneider

WASHINGTON (Reuters) - U.S. President Donald Trump and Democratic rival Joe Biden hold the first of three debates Tuesday night ahead of the Nov. 3 election, and the economy is expected to be a key topic.

At issue: What did Trump accomplish for the economy in three tumultuous years of trade wars and tax cuts? How much blame should he bear for the mass layoffs and slump triggered by the coronavirus pandemic? Can Biden convince voters he will be a better steward of the world's largest economy?

Before March, Trump had a clear argument for reelection. Record-low unemployment and rising wages were helping the less well-off, while a record stock market buoyed richer Americans.

Even at that point, however, growth seemed to be slowing as the impact of 2017's tax cut, which slashed taxes for companies, ebbed.

Stacked against his campaign promises from 2016, Trump's record was mixed on issues including eliminating the trade deficit and locking in 3% annual economic growth. (See graphic: https://tmsnrt.rs/2P4ZAuG)

From perhaps the broadest barometer - job creation - the economy under Trump actually slowed from the trend begun during former President Barack Obama's second term, before the pandemic hit.

The economy added about 2.5 million jobs per year from 2013 through 2016 compared to around 2.1 million per year during Trump's first three years in office.

(Graphic: The Obama jobs handoff - https://graphics.reuters.com/USA-ELECTION/ECONOMY/nmopawbqqpa/chart.png)

Still, the economy was performing well through the start of 2020, a point Trump is likely to focus on Tuesday night. He is likely to highlight details such as the record-low unemployment rates reached for Black and Hispanic Americans.

(Graphic: Unemployment by race - https://graphics.reuters.com/USA-ELECTION/ECONOMY/dgkvlbqbdvb/chart.png)

All that, of course, ended in March.

The pandemic drove consumers indoors and led to a wave of both voluntary and mandated business closures. After a record-setting crash in U.S. economic output from April through June, and millions of layoffs, Trump approaches November with the economy currently about 5 million jobs short of where it was when he took office.

(Graphic: Trump's economy: After the pandemic - https://graphics.reuters.com/USA-ECONOMY/ELECTION/gjnvwjkjkpw/chart.png)

The president's case has shifted - from promoting the "greatest" economy in U.S. history to arguing he is better equipped to restore it.

Biden and his supporters argue https://www.reuters.com/article/us-usa-election-economy-factbox/trump-biden-offer-clashing-visions-on-reopening-economy-idUSKBN2681FW Trump's response to the pandemic was slow, ineffective, and made the situation worse.

More than 200,000 Americans have died from the coronavirus, making the United States the country with by far the highest death toll. In the background, the economy has been recovering faster than initially expected, but the virus also continues to spread, putting the economic recovery at risk.

Models that use economic data to predict election results are harsh on incumbents when jobs numbers are weak, and analysts note that the economy has gone from being an asset for Trump to a liability. "A recessionary unemployment rate and depressed incomes following the expiry of government aid programs will push the pocketbook votes toward Joe Biden," Oxford Economics analysts predicted this week.

(Reporting by Howard Schneider; Editing by Andrea Ricci)