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November 8, 2016

A Positive View of a Negative Economy

 

The media and the left have repeatedly characterized the presidential election as a contrast between a generally positive versus a very negative view of the economy. 

For example, Jared Bernstein of the left-wing Center on Budget and Policy Priorities recently said on National Public Radio, “Donald Trump's interpretation of the current economy is very, very negative whereas Hillary Clinton would argue that things are moving in the right direction.” 

But it’s not either/or. One can very easily (and correctly) believe both at the same time. 

The economy has improved since the 2007-09 recession, but every “positive” in the Obama economy comes with a great big “but.”  

Yes, the economy has grown, but at a much slower pace than previous economic recoveries. Is that a positive or a negative? 

Yes, unemployment is low, but in part because millions of frustrated unemployed Americans have quit looking for work. Is that a positive or a negative? 

Yes, middle-class wages seem to be stagnant, only recently beginning an uptick, but that stagnation is in part due to Washington forcing employers to spend more money on benefits—e.g., Obamacare—which means they can’t use that money to raise wages. Is that a positive or negative? 

To be fair, Hillary Clinton is in a tough place. She has to say nice things about the Obama economy because she wanted President Obama’s support—and the support of those who voted for him.  

But if this economy had been the result of a Republican administration, there would be no end to her denunciations of its “slow-growth” policies. And that’s the position Donald Trump has taken. 

The average annual economic growth rate between 1948 and 2016 is 3.2 percent. Economic growth hasn’t hit 3 percent in any year under Obama. Not once. 

The “positive” Clinton has little choice but to praise underperformance and mediocrity, while the “negative” Trump says the country can and should be doing much better.  

By virtually every measure the Obama economy has been an underachiever—that’s the negative. Strangely, many academics, the media and Democrats are satisfied with this mediocrity, and claim it’s the “new normal”—and it is, if the next president keeps the same policies. 

But on the positive side, IPI believes there is a lot of economic growth left in the U.S. economy, and with the right policies and tax reform, we could see 4 percent growth or more.


 

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