President Trump has a lot going for him these days, at least economywise.
Employment is strong, the stock market continues to hover near record highs, and Congress is poised to pass tax cuts that should produce a bit of additional tailwind for the next year or two.
But not all is well. In the latest Yahoo Finance Trumponomics Report Card, Trump’s grade on the economy drops from an A- in November to a B for December. That’s a two-notch downgrade. The main reason is weak earnings, which have barely risen this year.
“Wage growth has been fairly muted, considering the tightening in the labor market,” says Ryan Sweet, director of real-time economics at Moody’s Analytics, which provides the data for our report card. “A significant and sudden acceleration in wage growth is unlikely.”
Our Trumponomics Report Card evaluates the economy on six key measures. We compare the economy’s performance under Trump with its performance under six prior presidents at the same point in their first terms. (See our full methodology.)
Here’s the dot plot showing Trump’s overall performance nearly a year into his first term as president:
Earlier this year, Trump’s rank on average hourly earnings was highest among the seven presidents. Though earnings growth has generally been weak for the last several years, Trump ranked high because of a solid jump in earnings during his first 5 months in office. We use each president’s first month as a baseline for each indicator, and calculate changes against that. By that measure, income growth looked good early in Trump’s tenure.
But income has declined slightly during each of the last three months, according to the index Moody’s established for our report card. Here’s the Trump trend, in blue, near the top, compared with the six prior commanders-in-chief:
Here are the numbers for Trump: Average hourly earnings rose 1.22% from February through July, according to the index Moody’s Analytics calculated. But from July through October, the last month for which data is available, earnings fell by about four-tenths of a percentage point. Overall, earnings are up by just 0.61% since Trump took office.
Trump’s ranking also declined one notch on exports, contributing to the lower overall grade. Exports under Trump have risen slightly—but not as much as they did under Barack Obama or Bill Clinton. Exports fell under George W. Bush. The data on exports only go back to 1993, so we can only compare Trump with three others. And exports could rebound soon. “Depreciation in the U.S. dollar and a strengthening economy will boost U.S. exports,” Sweet says.
The Yahoo Finance audience has strong opinions on whether Trump deserves credit for the relatively strong economy so early in his term. Here’s our view: For the most part, Trump inherited an economy that had been steadily improving for years. Job growth, for instance, has improved under Trump at about the same pace it did under Obama. And the stock-market rally we’ve seen this year is really the continuation of a long bull market that began all the way back in 2009, Obama’s first year.
But the further into the Trump presidency we get, the more it will become the Trump economy, reflecting the current president’s policies and performance. Presidents ordinarily get credit or blame for the way the economy behaves under their watch, whether they deserve it or not. So far, that has worked out for Trump.
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Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman