Trump seeks to connect new GDP figures with pre-pandemic economy

President Trump is leaning on the legacy of the strong economy that spanned most of his first term in hopes that it will overshadow the devastation wrought on millions of Americans by the coronavirus pandemic.

Trump and Republican lawmakers have emphasized the strength of the pre-pandemic economy and the nascent recovery, particularly new economic figures out on Thursday, as vindication of their agenda in the final days of a grueling campaign.

But that economic prosperity may feel too distant for too many voters, with more than 23 million Americans still on unemployment benefits, thousands of businesses facing uncertain futures and new COVID-19 cases hitting record highs.

“If you judge him on how things were in January 2020, the labor market stands out as just an extraordinarily big piece of success,” said Douglas Holtz-Eakin, director of the Congressional Budget Office during the George W. Bush administration and chief economic policy adviser to the late Sen. John McCain’s (R-Ariz.) 2008 presidential campaign.

“If you think of his handling of coronavirus as part of the economic record, then it gets more complicated,” Holtz-Eakin added.

Trump has repeatedly attempted to separate the two issues.

Over the past few days, he has touted the record-breaking 33.1 percent annualized growth in gross domestic product (GDP) in the third quarter as proof he is getting the world’s largest economy back on the right track.

“We’re really celebrating this because nobody thought it was possible,” Trump told reporters at the White House on Friday. “It really shows that our policies work. If you had a president with different ideas, instead of having a 33.1 gain you’d have a disaster on your hands.”

But Thursday’s GDP report is one of very few bright spots since the pandemic took hold, marking a stark contrast to less than 10 months ago when Trump seemed well positioned to ride the economy to reelection.

Earlier this year, economists across the ideological spectrum marveled as the unemployment rate dropped to 3.5 percent — a 50-year low — without spurring rampant inflation. The economy was largely able to push through the blowback of Trump’s tariffs and trade wars, and the stock market continued to smash through record highs with a boost from the 2017 GOP tax cut bill, which reduced the corporate tax rate from 35 percent to 21 percent.

“One of the biggest stories under the Trump presidency for the stock market really was the change in tax code for corporations,” said Lindsey Bell, chief investment strategist at Ally Invest.

“That was a big driver of the stock market run up into 2018,” Bell said, adding that low Federal Reserve interest rates also played a crucial role.

Much of that economic progress began under former President Obama, and Democrats are quick to note that the pace of job gains during Obama’s second term was similar to the pre-COVID-19 Trump era. The stock market had also been rising steadily heading into the 2016 election.

“It’s not like the minute one administration gets into office, everything that was happening prior to that just stops and we turn on a dime,” said Dania Francis, an economics professor at the University of Massachusetts Boston.

“A lot of these forces are long-term trends. They’re the results of policies that have been in place for a long time,” she said. “When the Obama administration came on after 2008, it wasn’t that we turned around immediately and started recovering. There was a lot of slow recovery that needed to happen from the Great Recession.”

Even so, the strong economic stretch of Trump’s first three years has given him an enduring lead on the issue among voters. In a Suffolk University-USA Today poll released Thursday, 48 percent of Americans approved of Trump’s handling of the economy and 45 percent disapproved — far better than the 38 percent who approved of his handling of the pandemic and 57 percent who disapproved.

Trump has sought to distance the economic toll of the pandemic from the prosperity that preceded it, leaning into one of the few edges he has over Democratic nominee Joe Biden while downplaying the coronavirus.

While the U.S. has yet to recover 10.7 million of the jobs lost to the pandemic, those who have held on to employment have largely been able to save money, pay down debt and fuel a surge in home goods purchases. The stock market has also largely recovered the losses it took at the outset of the pandemic, and both the S&P 500 and Nasdaq set record highs amid the recovery.

“There are folks who are working from home. They’re still employed, so they’re still earning their income,” Francis said.

“There are folks who are doing better, who maybe are simply giving the president a pass on what’s happened,” she added.

But disconnecting the pandemic from the recession left in its wake may prove impossible for many U.S. households.

Economists and public health officials broadly agree that controlling the pandemic through extensive testing and mask-wearing, both of which have been criticized by Trump, is essential to a full recovery. The rising third wave of COVID-19 cases and a breakdown in bipartisan stimulus negotiations also pose dire threats to the fragile recovery.

“The COVID-19 recession really cuts against his successes in the labor market because we know that, disproportionately, the low wage workers are still unemployed,” Holtz-Eakin said.

“For high-skilled workers, the recession is over,” he added.