The Politics of Objective GDP Numbers: “Flex Facts” on Growth

We look back at the annual GDP growth rate count from Carter to Biden in a “BS check” on who did what when.

Oct 30, 2024

The Trump Presidency had a 3% GDP growth record… (oops I meant 2%)

We look across the decades from 1977 with a GDP growth chart that details the number of annual GDP growth rate counts under each President by bucket (2%, 3%, etc.). Facts matter.
After listening to Kevin Hassett this week and Gary Cohn in a separate CNBC interview a few weeks back both describe the Trump economy as a 3% economy, you start to wonder how far the mighty have fallen in terms of basic objective facts.
The post-millennium growth rates were weak across the board, so there is no shame in a 2% GDP number unless you reinvent it as 3%. That is a 50% exaggeration on its face (aka lying).
Annual 2% GDP growth rates is the norm with Trump and Biden similar during the “distortion free” years. Trump had one annual GDP growth year of 3.0%, two in the 2% range and one negative during the 2020 COVID year.
For the three annual prints under his belt, Biden had the single 6% handle pop in 2021 (as revised) on the COVID rebound with 2.5% in 2022 and 2.9% in 2023. We see 2024 shaping up as a likely member of the 2% bucket.
Some Trump dignitaries play the game of enhancing his 4 years into a 3% period. That is factually false. Trump never cites GDP numbers and instead works the adjective checklist. He would highlight stock markets, but for some reason has trimmed that theme back given Biden’s record stock markets.

The above chart is a simple “scoreboard” table of how many annual GDP growth years landed in each growth bucket. We have had 47 complete annual GDP years since the start of the Jimmy Carter administration with one to go in 2024. We will publish on today’s advance 3Q24 numbers separately, but 2024 is looking to land in the > 2% bucket in all likelihood.

Such factual tables taken directly from the BEA take the political spin out of economic facts. We would note that Project 2025 is looking for the White House to purge, consolidate, and closely control the BEA and related data sources. We use the latest data from the BEA in generating the above chart. That led to some increases and decreases of the line items relative to past reconciliations we have posted.

The GDP count across time…

In the chart above, we use “less than 0%” for the negative GDP years and then break out each bucket with a “greater than >” symbol for each level from 0.0% to +7.0%. Those falling on the cusp (e.g. Clinton at +4.0% in 1994) fall in the lower bucket (i.e. we use greater than, not >/=). Those years that fit that cusp line include Clinton at 4.0 % in 1994, Bush at +1.0% in 2001, Bush at +2.0% in 2007, and Trump at 3.0% in 2018. For Trump, the 2017 annual growth rate was +2.5% and 2019 was +2.5% while the COVID year of 2020 was -2.2%. Those are the BEA annual numbers.

Our takeaways from the table include:

The post-millennium years are low growth: Except for the whipsaw after COVID to +6.1% (as revised) in Biden’s first year, the only high growth year from 2000 without an asterisk was Clinton’s +4.1% in 2000. Then the trouble set in across wars, massive budget deficits, market bubbles that blew up (TMT aftereffects, Housing, structured credit). The theme from “This Time is Different” seems to be playing out that sovereigns with very high debt to GDP see slower growth potential (see US Debt % GDP: Raiders of the Lost Treasury 5-29-23).
Trump had a single 3.0% year: Despite some financial/political dignitaries (Kevin Hasset this week, Gary Cohn on CNBC a few weeks ago) loosely tossing around the idea of Trump’s solid “3% economy,” they were running fast and loose with the facts (aka “making it up”). Trump’s first term was a 2% overall economy not a 3% economy. If we include 2020, Trump’s was, in fact, a 1% economy. He hit 3.0% once in 2018. The year 2018 posted a strong running start after the tax bill, but then the tariff fixation and NAFTA renegotiation battle took over.
Tariffs and trade undermine Trump: During 4Q18, equity and HY markets were hammered (see HY Pain: A 2018 Lookback to Ponder 8-3-24, Histories: Asset Return Journey from 2016 to 2023 1-21-24). The Fed was soon easing in 2019 as fixed investment and exports lagged. Those paying attention at the time were saying the tax bill was great, but then Trump undid the benefits with the tariff excess and eroding confidence in trade. Trump clearly has not learned from that period and is seeking to literally more than quadruple down.
Bipartisan economies with cooperation won the battles over the decades: We have covered this topic separately looking back across the Clinton years and the Reagan years given how well those economies did (see Presidential GDP Dance Off: Clinton vs. Trump 7-27-24, Presidential GDP Dance Off: Reagan vs. Trump 7-27-24). The two big headwinds now are legislative dysfunction and too much debt. We see a routine mission to make others fail, but more importantly the massive, runaway deficit and sovereign balance sheet burden is coming home to roost for whoever wins. Trump tariffs vs. taxes is on a collision course with math.
Look at the scoreboard: When Trump and his sycophants talk about “the greatest economy ever” the bipartisan response is “he was crushed by the Reagan and Clinton numbers.” A more accurate response would be: “Reagan and Clinton were smart enough to pass sound legislation on a bipartisan basis. They went through the expected conflict in the process, but they put the country first.” The winner on a combination of growth and no recession is pretty clear on the scoreboard: Bill Clinton.

It has been illuminating (and slightly depressing) to watch the gamesmanship around accurate numbers that are a matter of public record even if they get updated and revised along the way. The CNBC crowd runs a great show but seeing them softball their way with celeb guests is unusual and a sign of the times.

When a candidate or his allies are making sweeping statements about “the greatest economy” since the primordial soup, an objective fact still has a role to play. We also call them numbers. Facts like “buyer pays” on tariffs (the media constantly finesses that with the tariff-supporting guests) or a 2% or 3% track record in GDP are material items to be honest about.

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