What President Trump Inherits

Candidate Donald Trump won the election claiming “our country is stagnant.” But President Trump actually inherits an economy experiencing steady if unspectacular growth in output, jobs and incomes.

The new president also inherits a mountain of national debt, large and growing federal deficits, 43 million Americans still mired in poverty and a rising murder rate.

These are some of the numbers by which the future successes or failures of the new presidency will be measured.

Jobs & Unemployment

Jobs — The economy has added nearly 2.2 million jobs in the most recent 12 months. It has gained jobs for 75 straight months – the longest streak on record.

President Barack Obama was not so fortunate. When he took office, the economy had already lost 4.4 million jobs in the preceding 12 months.

During Obama’s first 13 months, the economy continued to shed another 4.3 million jobs. But as Trump enters office, employers are eager to hire millions more. The number of job openings continues to hold at near record levels.

The most recent figures show that as of the last business day in November, there were more than 5.5 million unfilled job openings — double the number in the month Obama took office in 2009.

The highest ever recorded in the nearly 16 years the Bureau of Labor Statistics has tracked this figure was in April 2016, when job openings topped 5.8 million. The figure has now been above 5 million every month for 22 months in a row.

Unemployment Obama also leaves Trump an unemployment rate that is well below the historical norm.

Currently it stands at 4.7 percent. In all the months since 1948 the median jobless rate was 5.6 percent.

Thus Trump has been dealt a far better hand than Obama, who took office when the jobless rate was 7.8 percent and rising. It hit a peak of 10 percent in October of Obama’s first year.

Income and Poverty

Income — Trump enters the White House at a time when incomes have begun to rebound after years of stagnation. In 2015 median household income jumped 5.2 percent — the largest one-year percentage increase since records began in 1967.

At $ 56,516, the 2015 figure was 2 percent higher (in “real” or inflation-adjusted terms) than the year before Obama took office.

But it was still 2.4 percent below the peak year of 1999, and also 1.6 percent lower than in 2007, the year that the Great Recession began.

The income figure for Obama’s final year won’t be released until September. On one hand, more people were working; stock prices scored healthy gains; and home prices also rose. Those all point to increased incomes.

But the rise in the buying power of weekly paychecks seems to have stalled in 2016, after two straight years of healthy gains. Real average weekly earnings for all workers rose 1.9 percent in 2014 and 1.7 percent in 2015, but barely changed in 2016, up only 0.2 percent in December over the previous December.

So real incomes probably scored another gain in 2016 — but how much remains to be determined.

Poverty — Trump also takes charge with millions of Americans still mired in poverty. In 2015 there were 43.1 million Americans with incomes below the poverty line.

Despite the biggest drop in the poverty rate since 1968 — it went down 1.3 percentage points to 13.5 percent in 2015 — the rate was still three-tenths of a percentage point above where it was in 2008, the year before Obama took office. And there were 3.1 million more people living in poverty.

Poverty figures for 2016 won’t be available until September, but unless they show more improvement, Trump is inheriting an even bigger poverty problem than Obama did.

Growth, Profits & Markets

Economic Growth Trump inherits an economy that is growing steadily — but more slowly than the 4 percent annual rate he proposed as a “national goal” during his campaign.

The economy posted six straight years of annual increases in real (inflation-adjusted) gross domestic product under Obama, and almost certainly will post a seventh for his final year; it already posted gains for the first three quarters of 2016. But year-to-year growth hasn’t reached 4 percent since the end of the dot-com bubble in 2000, which peaked with a 4.7 percent GDP gain in 1999.

The best year since then was 2004, when the economy gained 3.8 percent. Under Obama, the best year so far was 2015, when growth was 2.6 percent.

We won’t know for several months exactly how fast the economy grew in 2016, but the gain is likely to be well short of 4 percent. The most recent official measure put growth at a yearly rate of 3.5 percent in the third quarter of 2016. But that followed two much weaker quarters — a scant 0.8 percent annual rate gain in the first quarter, and a 1.4 percent rate gain in the second quarter.

And the last three months of 2016 aren’t expected to be as strong as the third quarter. The Federal Reserve Bank of Atlanta’s “GDP Now” model projected, as of Jan. 19, that the official fourth quarter estimate will be 2.8 percent when the Bureau of Economic Analysis issues it on Jan. 27.

Corporate Profits — As Trump takes over, corporate profits are running at near-record levels.

After-tax corporate profits hit a record $ 1.73 trillion in 2014, dipped to $ 1.58 trillion last year, and were running at an annual rate of $ 1.68 trillion in the third quarter of 2016.Previous to Obama’s tenure, the best year for after-tax corporate profits was 2006, when they hit just under $ 1.38 trillion. Profits have now exceeded that old record for the past six years running, and are on track to do so again in Obama’s final year in office.

Home Values —  Trump takes office as sales prices of existing single-family homes finally have recovered from the housing crash, at least in non-inflation-adjusted dollars.

The most recent monthly sales figures from the National Association of Realtors show the national median price of an existing, single-family home was $ 236,500 in November.

That’s nearly 7 percent higher than for all of 2006, just before the housing bubble began deflating in 2007, bringing on a financial crisis and the worst recession since the 1930s.

The Realtors figures reflect raw sales prices without attempting to adjust for such factors as variations in the size, location, age or condition of the homes sold in a given month or year. Even so, a similar pattern emerges from the S&P CoreLogic Case-Shiller U.S. National Home Price Index, which compares sales prices of similar homes and seeks to measure changes in the total value of all existing single-family housing stock.

The Case-Shiller index for October sales also was 0.2 percent above the previous peak level reached in July 2006.

Note, however, that neither the Realtors sales figures nor the Case-Shiller index is adjusted for inflation, which as of December 2016 has gone up nearly 20 percent since December 2006, as measured by the Consumer Price Index.

Health Insurance

As Trump takes charge, a lower percentage of Americans lack health insurance than at any time on record — thanks to a program he vows to replace.

Only 8.9 percent of all U.S. residents lacked coverage during the first half of 2016, according to the most recent figures from the National Health Interview Survey conducted by the Centers for Disease Control and Prevention.

That’s the lowest uninsured rate on record. The rate was 14.7 percent when Obama took office, and rose to 16 percent in 2010, after millions had lost their jobs and employer-sponsored coverage because of the Great Recession. But it plunged after the Affordable Care Act’s mandates, subsidies and insurance exchanges went into effect in 2014.

To be sure, the ACA has problems, including an average rise in 2017 premiums on the HealthCare.gov exchanges of 25 percent, and some major insurance companies pulling out of those insurance exchanges. “We’re going to have a health care that is far less expensive and far better,” Trump said at a news conference Jan. 11, promising to provide a replacement plan shortly after the Senate confirms his choice for secretary of health and human services.

Deficits and Debt

Debt – Trump inherits a rising tide of red ink, on top of a federal debt that has more than doubled under Obama.

Obama still boasts of “cutting our deficits by nearly two-thirds,” but the fact is those deficits are growing again and projected to get much worse. And Trump takes office promising large tax cuts and spending increases for infrastructure.

The annual federal deficit hit $ 587 billion in fiscal year 2016 (which ended Sept. 30, 2016), up nearly 34 percent from $ 439 billion in fiscal 2015. For the first three months of fiscal 2017, the deficit was another $ 207 billion.

And it’s projected that big deficits will continue indefinitely under current law. The nonpartisan Congressional Budget Office projects that as things stand, annual deficits will again hit $ 1 trillion in 2024 and beyond — as they did the four fiscal years ending in FY 2012.

The debt owed to the public stands at more than $ 14.4 trillion as Obama exits office, which is 129 percent higher than it was eight years earlier. Federal debt owed to the public will reach more than 80 percent of GDP in 2022, and nearly 86 percent in 2026, CBO projects.

(“Total” debt is nearly $ 20 trillion, up 88 percent under Obama. But that figure includes money the government in effect owes to itself.)

Stock Prices

Trump takes office with stock prices near historic highs, after an eight-year run-up that will be a tough act for Trump to follow.

Under Obama, stock prices set record after record. For example, all three major stock market indexes set records on a single day, Aug. 15.

As of the market close on Jan. 19, the Standard & Poor’s 500-stock index was 181 percent higher than it was the day Obama took office.

The Dow Jones Industrial Average also more than doubled, rising 148 percent during Obama’s tenure, and the NASDAQ Composite index more than tripled, rising 284.5 percent.

Some of the rise took place after Trump’s surprise victory in the Nov. 8 election, a rally attributed in part to investor optimism that Trump’s promised cuts in business taxes and regulations will add further to corporate profits.

But even when the markets closed Nov. 8 — before the polls had closed and when few thought Trump would win — the S&P 500 had gained 166 percent, the Dow Jones had gained 131 percent and the NASDAQ had gained 260 percent.

Crime

Trump inherits a murder rate that has turned upward again, after reaching the lowest point in decades in 2014.

The latest FBI statistics — released Jan. 9 — show the number of murders and nonnegligent homicides in the U.S. rose 5.2 percent in the first half of 2016, compared with the same period in 2015. The estimate is preliminary, but if the increase holds for all of 2016 that would mean a rise in murders for the second straight year.

 

The murder rate in 2015 was 4.9 murders per 100,000 in population — up from 4.4 in 2014, which was the lowest since 1960, when the current statistical series began, and more than half the peak rate of 10.2 reached in 1980.

During the campaign, Trump kept repeating the utterly false claim that the murder rate was the “highest it’s been in 45 years.” In fact, even with murders rising, Americans were less likely to be murdered in any of the past eight years than at any time since the 1960s. In 2008, the rate was 5.4 per 100,000, and it has not been that high since.

As for other violent crimes, the FBI reports that robberies and assaults also increased during the first half of last year — but the number and rate of both declined significantly from 2008 to 2015. Rapes increased, as they have since 2013.

On the other hand, nonviolent “property” crimes continued to decrease in the first half of 2016. In 2015, Americans were 23 percent less likely to be a victim of burglary, auto theft or other property crimes than they were in 2008. And the number of property crimes edged down further by 0.6 percent in the first six months of last year.

Comprehensive statistics for 2016 won’t be issued until September. But if these preliminary estimates for the first half of the year are an indication, Trump inherits a much lower overall crime rate than Obama did, despite the recent rebound in violent crimes.

Guantanamo

Trump inherits 45 prisoners who remain at the military detention camp for suspected terrorists in Guantanamo Bay, Cuba.

Obama promised to empty the facility and close it, but Congress blocked his efforts. Trump, on the other hand, vowed to keep it open and to repopulate it, saying that “we’re gonna load it up with some bad dudes, believe me, we’re gonna load it up.”

Keeping it open will be expensive. A Pentagon study released last year put the cost to operate the Guantanamo Bay detention mission at “approximately $ 445 million” in fiscal year 2015.

Editor’s Note: We usually produce a quarterly report called “Obama’s Numbers” in January. But the books aren’t closed on the Obama presidency just yet, so we will do a final accounting later this year. 

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