This Measure Says Growth Is Slower Under Trump Than Obama

(Bloomberg Businessweek) -- The economy has been perhaps the brightest spot of Donald Trump’s unconventional presidency. A recession would tarnish this, which is presumably why he gets so worked up about perceived missteps by the Federal Reserve. But by one measure, economic growth is already slower during the Trump era than during Barack Obama’s eight years as president.

That measure is gross domestic income. GDI is part of the same quarterly national economic accounting by the U.S. Department of Commerce’s Bureau of Economic Analysis that gives us gross domestic product but is released a month later. The two numbers should, in theory, be identical, but they never quite are because of the vagaries of real-world data. In a 2010 paper, economist Jeremy Nalewaik—then at the Fed, now at Morgan Stanley—made the case that “GDI better reflects the business cycle fluctuations in true output growth.”

The paper had some consequences. The BEA started giving GDI some attention in its GDP news releases and publishing the average of GDP and GDI. Also, the Federal Reserve Bank of Philadelphia now calculates a statistically smoothed melding of GDP and GDI, devised in part by Nalewaik, that it calls GDPplus. The presidential growth rates admittedly depend a lot on the starting quarter one chooses, especially for Obama, who took office amid the worst recession in 75 years. Also, while growth rates have been about the same or only moderately higher under Trump, people aren’t wrong to think the economy is better. More are sharing in growth now because the long expansion has brought workers off the sidelines.

• Timing Is Everything

If you measure from the quarter before they took office, Trump leads in GDI growth, 2.5% to 2.1%. Measure from the last quarter of the first year in office (because it takes time for policies to have an effect), and it’s Trump 2.5% to Obama 2.4%.

• Smooth Calculator

According to BEA data, GDI has grown at a 2.3% annualized pace since Trump took office, vs. 2.4% during Obama’s two terms.

• On the Job

Payroll employment has grown at a 1.5%annual pace during Trump’s time in office, faster than the 1% during Obama’s entire presidency but slower than the 1.9% of Obama’s second term.

• But Wait, It Gets Better

Of Americans age 25-54, 80% had jobs in August, according to the Bureau of Labor Statistics, the highest prime-age employment rate in more than a decade and perhaps a better measure of economic health than either GDP or GDI growth.
 
Fox is a business columnist for Bloomberg Opinion

To contact the editor responsible for this story: Jillian Goodman at jgoodman74@bloomberg.net

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