As for “historic”, someone might want to point out to Paulson that the unemployment rate held below 4 per cent for 27 consecutive months up to and including April, the longest stretch since the 1960s. (Although May’s reading came in at 4 per cent, it was actually 3.964 per cent.) There are more gains to come if the Business Roundtable CEO report is to be believed, as it shows expectations of stronger sales, greater capital spending and more hiring.

Justifying support for Trump by citing excessive government spending under Biden is tenuous at best. Sure, the American Rescue Plan Act, the Infrastructure Investment and Jobs Act, the Inflation Reduction Act and the Chips and Science Act caused the budget deficit to swell. But the programs are starting to pay off, and the shortfall has shrunk to 5.75 per cent, not all that different from the 4.91 per cent in early 2020 (starting at 3.05 per cent at the end of 2016, the level steadily grew each year Trump was in office). Unlike the Tax Cuts and Jobs Act of 2017, these programs are actually making the US economy stronger. The Chips and Science Act alone, signed into law by Biden in 2022, has led to almost $US150 billion of investment in US semiconductor research, development and production.

As I recently pointed out, the US economy overall has de-levered when you include not just the government but households, businesses, and financial institutions. According to the economists at Wells Fargo & Co, debt in America has fallen to 334 per cent of GDP from the peak of 368 per cent in 2009.

This helps explain why demand at the Treasury Department’s debt auctions has not diminished, and non-US investors have added a net $US1.02 trillion of Treasuries to their holdings under Biden to the end of March, compared with $US1.07 trillion in all four years under Trump. It’s hard to imagine America’s creditors continuing to lend us all this money if they thought the economy under Biden was headed in the wrong direction. The only takeaway is that they see the economy strengthening, helped by the incentives and subsidies the Biden administration has dangled in front of companies to bring their manufacturing back to the US.

A Financial Times analysis a year ago identified “75 large-scale manufacturing announcements in the US” since the Chips and Inflation Reduction Acts were signed into law. And although the perception is that Biden has an anti-energy industry bias, the fact is that the US is the world’s largest oil producer, a position that has only strengthened under his administration.

If billionaires backing Trump want lower taxes for themselves and their businesses, they should just say that and make the case for why that would benefit America rather than relying on “alternative facts” about the economy that are easily disproved.

It’s often said that a currency is to a nation what a share price is to a company. If true, then America has been a raging buy. The Bloomberg Dollar Spot Index, which tracks the greenback against its main peers, tumbled 11.6 per cent under Trump (including a 6.5 per cent slide during the first three years of his presidency). Under Biden, it has rebounded strongly, soaring 12.7 per cent. In fact, of the 31 major currencies tracked by Bloomberg, the only one it hasn’t appreciated against is Mexico’s peso.

As Robert Rubin, the former Treasury secretary in the Clinton administration, would often say, a strong dollar is in the country’s best interests, and the government should be careful not to undermine trust in the currency. For one, a strong dollar makes it a dependable store of value, which attracts the foreign capital needed to service America’s budget and trade deficits. Second, a strong dollar makes imports cheaper, which helps lower inflation rates.

It’s probably no coincidence that the dollar’s weakness under Trump came as he also floated shortsighted ideas about undermining its strength as a way to help exporters. But despite Paulson’s assertion about the trade deficit narrowing under Trump, it actually expanded, showing that a depreciating currency doesn’t always boost exports at the expense of imports.

It may be a cliche that the stock market is not the economy, but that didn’t matter to Trump. Hardly a week went by without him touting the gains in stocks as a referendum on him, his policies and the economy. Here, too, the numbers tell a different story.

Since the 2020 election, the S&P 500 Index has surged 58.7 per cent while the broader Russell 3000 Index has gained 53.1 per cent. At this point in the Trump administration, the S&P 500 had gained 49.3 per cent and the Russell 3000 was up 47.7 per cent. Those numbers tell only part of the story. As the chart below shows, investors value US stocks much more highly now than under Trump, both on an absolute basis and relative to the rest of the world.

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So what about the elephant in the room, otherwise known as inflation? There’s no denying that inflation rates soared under Biden, but the reason is more nuanced than profligate government spending. The big gains in money supply came during 2020 when the government put in place crucial programs to underpin the economy during the Trump lockdowns. Also, disruptions to the global supply chain that limited the availability of many goods may be as much – or more – to blame for inflation than spending.

The thing is, the wealthy and big business got what they wanted from Trump: lower taxes and less red tape that came after an executive order that required two regulations be cut for every new one added. It’s not evident that the economy benefitted or that financial markets rewarded the Trump administration for these policies. If billionaires backing Trump want lower taxes for themselves and their businesses, they should just say that and make the case for why that would benefit America rather than relying on “alternative facts” about the economy that are easily disproved.

Bloomberg

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