In his Washington Post column Charles Lane says, just one minute—Trump doesn’t really deserve the credit for an improving economy:
The economy is in good shape — phenomenal shape, really. The labor market is nearing full employment, inflation’s mild, and Wall Street bulls are running. So the question on everyone’s mind is: Who deserves the credit — President Trump or his predecessor, Barack Obama?
In a Post/ABC News poll released Jan. 21, Obama won, 50 to 38. Surprise, surprise: These percentages correspond closely to Trump’s overall approval and disapproval ratings.
The pollsters should have offered a third choice. If personal responsibility for prosperity belongs to anyone, it would be the cerebral economist who on Wednesday presided over the last Federal Reserve meeting of her four-year term as chair: Janet L. Yellen.
My own view is that, broadly, that’s correct. I think that presidents don’t have as much impact on the economy as many people seem to think they do, particularly in the first year of their presidencies. Barack Obama didn’t “save” the economy. It was already saved by the time he took office. The trends in employment were already in place when Donald Trump took office.
I think there’s one exception to that: the stock market. The stock market dove when George W. Bush took office and when Barack Obama took office and has soared under Donald Trump. If you think that’s a good thing, then Trump unquestionably deserves some credit for it just as Bill Clinton deserves some credit for the stock market during his term of office. He was a great cheerleader for the economy.
But let’s turn to Janet Yellen. Does she deserve credit for the improvements in the economy from 2014 to the present, blame for how slow the improvement has been, or both? I think both but the main culprit was Ben Bernanke. If you want to blame someone for the slow growth in the economy, the slow growth of wages, widening income inequality, and the massive problems with public pension plans, look no farther. And it was a deliberate policy, not unforeseen.
Yes, presidential influence is overstated. Imagine politicians taking credit and opponents assigning blame?
They do set a tone, though, animal spirits and all. And despite your doubts about tax policy, an awful lot of business people see a lengthy runway now. It generally takes more than a quarter to implement plans. Also, recall, Bill Clinton lowered the CG tax rate. Obama was a sourpus. Trump a cheerleader. The equity markets get to look farther ahead.
As for the Fed. Too much intervention.