US economy under Trump: By the numbers

[WASHINGTON] Prior to the coronavirus, the US economy was on strong footing, propelled by low unemployment, bargain basement borrowing rates and healthy consumer spending.

Given this backdrop at the start of 2020, US President Donald Trump seemed headed towards a second term in the White House.

But the US economy has suffered a brutal blow from Covid-19, forcing businesses nationwide to close their doors, and the damage is apparent in leading economic benchmarks.

UNEMPLOYMENT

Mr Trump inherited an economy with already-low unemployment of 4.7 per cent when he took office in January 2017, less than half the peak hit in the aftermath of the 2008 Global Financial Crisis.

The Trump economy continued to improve following the gains made during the eight-year presidency of Barack Obama. Unemployment hit a 50-year low of 3.5 per cent in September 2019.

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But conditions deteriorated sharply once the coronavirus shuttered much of the US economy in March, and unemployment jumped to 14.7 per cent in April.

The jobs picture has improved as businesses reopened, falling to 7.9 per cent in September, although hiring has begun to slow in recent months.

In 2018 and 2019, the US economy created an average of 193,000 and 175,000 a month, respectively, compared with 227,000 and 195,000 in 2015 and 2016, the last two years of Mr Obama's presidency.

GROWTH AND RECESSION

US growth was relatively robust prior to Covid-19.

Growth topped two per cent in each of the Mr Trump's first three years, dipping in 2019 to 2.3 per cent from 2.9 per cent a year earlier. That was still higher than GDP in other large economies.

But the turmoil of the coronavirus has upended normal trends, with the US experiencing an historic drop in growth in the second quarter, followed by an unprecedented bounce in the third quarter.

Even with the improvement in the most recent quarter, US GDP in the third quarter still lagged the year-ago level by 2.9 per cent, according to US data.

DEFICIT AND DEBT

A centerpiece of Mr Trump's presidency was the US tax cut package enacted in late 2017, which trimmed the tax rate on corporate profits to 21 per cent from 35 per cent, and lowered taxes for the wealthiest individuals.

The tax overhaul, the biggest change in 30 years, helped boost economic growth in 2018, but also ballooned the deficit, which surged to more than US$1 trillion in 2019.

The turmoil from the coronavirus and resulting outlay of massive new federal spending has further exploded the country's deficit above US$3 trillion, a new record by a wide margin.

EMERGENCY RELIEF

Facing an unprecedented slowdown due to the coronavirus, Republicans and Democrats came together in March to enact a US$2.2 trillion economic support package.

The measure included stimulus checks of up to US$1,200 for every American, extra unemployment payments of US$600 a week, and forgivable loans for small businesses battered by the coronavirus to help them pay their employees.

But key elements of the CARES Act have expired and policymakers in Washington failed to agree on a new package of support, putting the economy on vulnerable footing as coronavirus cases hit new peaks.

CENTRAL BANK

Mr Trump has frequently criticised the US Federal Reserve and Chair Jerome Powell, whom Mr Trump appointed.

Mr Trump blasted Mr Powell over the decision to raise interest rates in 2018, saying the move weighed down the US economy.

But the Fed has taken aggressive action in the wake of the coronavirus, slashing the benchmark lending rate to between zero on March 16.

The Fed has also announced myriad programmes to boost liquidity in financial markets, and provide loans to previously healthy companies.

AFP