The third year of Donald Trump’s presidency seems likely to be remembered more for his impeachment than for anything else. But a look at economic data shows that the United States economy expanded in 2019. In fact, many economic numbers appear to confirm much of Trump’s claims about the economy.
There are worries about the future. But the main economic measures rose, overcoming the effects of the trade war with China.
However, a tax cut and large increase in the national debt guarantee that interest payments will take up an increasing share of the federal budget. At the same time, if there is any sign of weakness in the U.S. economy, the U.S. central bank — the Federal Reserve — could find it does not have the tools to influence events.
Jobs, jobs, jobs
Trump promised to create more jobs when he campaigned for the presidency in 2016. The U.S. Bureau of Labor Statistics reports the country has added about 6.8 million of them since then.
During Trump’s first two years in office, economic growth rose sharply. Between 2011 and 2016, the gross domestic product (GDP) increased by about 2 percent each year. In Trump’s first two years, that average increased to 2.9 percent.
In 2019, however, GDP appeared likely to end the year at a 2.1 percent rate of growth.
Economists suggest the slowdown is partly the result of American policies in international trade.
In 2019, Trump escalated a trade war with China. He placed tariffs on hundreds of billions of dollars’ worth of imports. So, China ordered tariffs on imports from the United States.
As a result, Americans have paid tens of billions of dollars more for Chinese products than they would have without the tariffs, and U.S. exporters have suffered business losses. The money that comes to the U.S. government from the higher tariffs has gone to farmers, whose products have been affected by the Chinese tariffs.
Trump announced in early December that he would order tariffs on steel from Brazil and Argentina. He also promised to put a 100 percent tariff on some imports from France. Clearly, the president is not backing away from his decision.
Economists and other experts will warn that “the stock market is not the economy,” and they are correct. But stock prices do show that investors’ believe the economy will continue growing because they have continued to rise.
In early 2019, the financial markets were coming off a period of unrest, but worries about their future growth left as the year continued. Major markets show year-to-date returns of between 20 percent and 25 percent through early December.
Interest rates have been part of economic concerns since before Trump took office. With the economy growing and unemployment decreasing, most Americans expected wages would rise. That would drive up prices and lead to higher inflation. But that did not happen. While the economy was adding millions of jobs, wages did not grow and inflation has been below 2 percent.
During a long period of economic growth, the federal government usually sets aside a lot of money or pays off its debt. But under Trump, that has not happened. Instead, the U.S. federal debt has increased every year and is now more the $22 trillion.
The increased debt worries people because of the share of the federal budget that must be used to pay interest. Experts warn that amount will only grow if the United States enters a recession.
I’m Susan Shand.
The Associated Press reported this story. Susan Shand adapted it for VOA Learning English. George Grow was the editor.
Words in This Story
impeachment – n. to charge a public official with a crime done while in office
statistics – n. a number that represents a piece of information
Gross domestic product (GDP) – n. the total value of the goods and services produced by the people of a nation during a year
tariff – n. a tax on goods coming into or leaving a country
escalate – v. to make something worse