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Donald Trump
stated on September 29, 2020 in the first presidential debate:
Before the coronavirus pandemic, the United States had “the greatest economy in the history of our country.”
true false
Trucks haul shipping containers at a terminal on Harbor Island in Seattle in 2019. (AP) Trucks haul shipping containers at a terminal on Harbor Island in Seattle in 2019. (AP)

Trucks haul shipping containers at a terminal on Harbor Island in Seattle in 2019. (AP)

Louis Jacobson
By Louis Jacobson October 1, 2020

Donald Trump’s dubious statement about presiding over ‘the greatest economy’ in history

If Your Time is short

• While unemployment was near historical lows under Trump, growth in gross domestic product was well below what previous presidents achieved, and other metrics such as wages and business investment ranged from decent to mediocre.

During the first presidential debate in Cleveland, President Donald Trump repeated an assertion he’s made literally dozens of times.

When the novel coronavirus appeared, Trump said, "I had to close the greatest economy in the history of our country."

The U.S. economy prior to the coronavirus was strong. But it was not the best in the nation’s history, economists say.

The strongest evidence for Trump is the unemployment rate. On Trump’s watch, the unemployment rate plunged to levels that it hasn’t touched since the early 1950s. It appears to be the lowest peacetime unemployment rate over a three-year period, going back to the Great Depression, said Gary Burtless, an economist with the Brookings Institution.

 

Trump benefited from the continuation of trends that had been in place under the Obama recovery. 

"While Trump can take some credit, I see it like the relief pitcher who comes in during the 9th inning with a seven-run lead, then boasts about winning the game," said Dean Baker, co-founder of the liberal Center for Economic and Policy Research. "It’s fine to get some credit for holding the lead, but this is much more an Obama story than a Trump story."

Growth in the nation’s gross domestic product — probably the single most important statistic used to gauge the overall strength of the economy — has been so-so on Trump’s watch. It didn’t reach his pledge of 4% growth a year, earning it a Promise Broken.

 

The annual increases in GDP under Trump were broadly similar to what they were during the final six years under his predecessor, Barack Obama. And GDP growth under Trump was well below that of prior presidents.

If you adjust GDP to take account of population, the picture remains weak for Trump. Calculations by Burtless found that inflation-adjusted GDP per capita increased 1.9% annually under Trump, which makes this three-year period the 16th highest among the past 30 non-overlapping three-year periods — right about average compared with his predecessors.

Economists added a couple other factors that cast doubt on the supremacy of the economy under Trump.

One is wages. Adjusted for inflation, wages that began rising during the Obama years continued to increase under Trump. But these inflation-adjusted wage increases were modest compared with the 2% a year seen in the 1960s. "This is not what you would expect with a 3.5% unemployment rate," Baker said, alluding to the pre-pandemic rate of February 2020. 

In addition, federal deficits relative to GDP have historically fallen during "great" economic periods, such as the 1960s and the late 1990s, when unemployment rates weren’t much higher than what the U.S. experienced before the pandemic, said Steve Fazzari, an economist at Washington University in St. Louis. 

By contrast, under Trump, the federal budget deficit widened even before the pandemic hit and has grown further during the crisis.

Another factor undermining Trump’s claim is that the Federal Reserve was feeding the economy with historically low interest rates — rates on par with what the Fed usually enacts during poor economic times to revive the economy. In fact, the Fed went so far as to interrupt its plan to "normalize" interest rates by stopping interest-rate increases in early 2019, and it began cutting rates in August 2019, well before the pandemic. (The Trump administration made it clear that it wanted to keep rates low.)

This "certainly contradicts the assessment of the economy as being ‘great,’" Fazzari said.

Burtless also looked at the growth rate in personal consumption per person, adjusted for inflation — a metric that for many families is the bottom line of economic activity, determining how much they can spend on food, clothing, housing, health care, and travel. 

In Trump’s three years in office through January 2020, real consumption per person grew by 2% a year. Of the 30 non-overlapping three-year periods since 1929, this ranks Trump 12th from the bottom.

Presidents can have an impact on economic conditions, but they are not the only factor. Oil price fluctuations, changes in technology and the state of the global economy are among the things outside of their control.

In Trump’s case, even the things he did, such as the 2017 tax cut, had "disappointing" results for economic growth, Fazzari said.

"According to its supporters, the tax cut was supposed to rocket GDP growth upward and, in particular, stimulate business capital investment," Fazzari said. "Neither has happened."

Specifically, he pointed to the inflation-adjusted rate of nonresidential private fixed investment, which measures purchases of such items as nonresidential structures, equipment and software. This metric rose for a while after the tax cut passed, but since then has been on a downward trend and actually went negative in late 2019 before collapsing during the pandemic. 

 
Our ruling

Trump said that before the coronavirus pandemic, the United States had "the greatest economy in the history of our country."

Economists pointed to multiple data points that undermine this assertion. While unemployment was near historical lows under Trump, growth in gross domestic product was well below what previous presidents achieved, and other metrics such as wages and business investment ranged from decent to mediocre.

We rate the statement False.

Our Sources

Donald Trump, remarks during the first presidential debate, Sept. 29, 2020

Bureau of Economic Analysis, interactive data, accessed Sept. 30, 2020

Federal Reserve Bank of St. Louis, "Real Private Nonresidential Fixed Investment," accessed Sept. 30, 2020

Washington Post Fact Checker, "President Trump’s repeated claim: ‘The greatest economy in the history of our country,'" Sept. 7, 2018

Email interview with Gary Burtless, senior fellow at the Brookings Institution, Sept. 30, 2020

Email interview with Dean Baker, co-founder of the Center for Economic and Policy Research, Sept. 30, 2020

Email interview with Steve Fazzari, economist at Washington University in St. Louis, Sept. 30, 2020

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