patrick.net

At least until the pandemic, the president’s unconventional policy got unprecedented results.

Joe Biden has argued that President Donald Trump didn’t so much build a strong economy as inherit one. It’s good line — but it ignores the successes, at least before the pandemic, of Trump’s unconventional policy. If Biden is elected president, he should continue Trump’s economic approach rather than returning to Barack Obama’s.

Between December 2009 and December 2016, the unemployment rate dropped 5.2 percentage points, from 9.9% to 4.7%. By December 2019, it had fallen another 1.2 percentage points, to 3.5%. A cursory look at those numbers might lead you to believe that the improvement under Trump was at best a continuation of a trend that began nearly a decade earlier.

It’s necessary to place those numbers in context. By 2016, officials in the Treasury Department and at the Federal Reserve had concluded that the economy was at full employment and that further improvement in the labor market was unlikely. This was in line with the Congressional Budget Office’s guidance that further declines in the unemployment rate would push the economy beyond its sustainable capacity.

Once in office, Trump ignored this consensus. He implemented a program of tax cuts, spending increases and unprecedented pressure on the Fed to cut interest rates to zero and keep them there. Trump’s goal of 3% growth was derided as delusional, while a bipartisan chorus of commentators declared his policies reckless and irresponsible.

They were anything but. Not only did the unemployment rate continue to fall, but the percentage of Americans aged 25 to 54 either employed or looking for a job saw its first sustained rise since the late 1980s. This inflection point changed the character of the labor market.

In 2016, real median household income was $62,898, just $257 above its level in 1999. Over the next three years it grew almost $6,000, to $68,703. That’s perhaps why, despite the pandemic, 56% of U.S. voters polled last month said their families were better off today than they were four years ago.